Risk management is the identification, assessment, and prioritization of risks (defined in ISO 31000 as the effect of uncertainty on objectives) followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities. Risk management’s objective is to assure uncertainty does not deflect the endeavor from the business goals.
These risks stem from a variety of sources including financial uncertainties, legal liabilities, technology issues, strategic management errors, accidents, and natural disasters.
A successful risk management program helps an organization consider the full range of risks it faces. Risk management also examines the relationship between risks and the cascading impact they could have on an organization's strategic goals.
The International Organization for Standardization (ISO) identifies the following principles of risk management:
Risk assessment is the determination of a quantitative or qualitative estimate of risk related to a concrete situation and a recognized threat (also called hazard).
For audits performed by an outside audit firm, risk assessment is a crucial stage before accepting an audit engagement. According to ISA315 Understanding the Entity and its Environment and Assessing the Risks of Material Misstatement, "the auditor should perform risk assessment procedures to obtain an understanding of the entity and its environment, including its internal control.
Risk—and risk management—is an inescapable part of economic activity. People generally manage their affairs in order to be as happy and secure as their environment and resources will allow. But regardless of how carefully these affairs are managed, there is risk because the outcome, whether good or bad, is seldom predictable with complete certainty.
There is risk inherent in nearly everything we do, but this course will focus on economic and financial risk, particularly as it relates to investment management.
Who this course is for:
This course is ideal for a person seeking an introduction to Risk Management: Economic and Financial Risk
Students appearing in CFA L1 exam for a second time must take this course as it is an addition in the 2016 curriculum
Students enrolled for my Portfolio Management course do not need to take this as it has been embedded in that course
