Question

1. Give short answers for the following questions: (16)

I. What are the basic steps involved in creating enterprise risk management programme?

II. How can the need for risk management be raised in an organization?

III. ‘Risks that an organisation faces usually originate from three sources’. What are these?

IV. What is a contingency plan?

Answer 1

1. I. Basic steps involved in creating enterprise risk management programme are identifying the risks and taking appropriate measures for preventing or mitigating those risks. It is done through creating processes for risk assessment and evolving measures for dealing with those risks by taking financial measures, legal and compliance, regulatory actions and defining a disaster management approach by preparing resources.

II. The need for risk management can be raised in an organisation by raising concerns about the financial impacts from risks, its adverse effects on companies business, environmental consequences and loss of resources that can occur without risk management process.

III. Three sources that lead to risks to an organisation are financial sources, legal and political reasons, environmental factors. Companies face risk due to unpredictable market conditions, change in policies and regulations and any unforeseen environmental disasters.

IV. A contingency plan is a measure taken for minimizing any harmful impacts from a risk factor that can occur . The plan is made for ensuring that the business is least affected and any steps to recover from the harmful impacts can be taken soon to restore regular business processes, customer operations and protect the organisational resources.