Learn the importance of the order of a risk management process.
- Albert Einstein said,…"If I had an hour to solve a problem,…"I'd spend 55 minutes thinking about the problem,…"and five minutes thinking about solutions."…This is the reason why the first question…of risk management is, what are your risks?…You need to identify the problem…before you can solve it.…But you also need to decide on a strategy…before jumping into solutions as well.…You need to truly know the importance…of following a risk management process…to build the right solutions.…
This is why the order of a risk management process…is critical.…If you go out of order. implementing an effective…risk management solution will become infinitely…more difficult, and less effective.…There's only one order you can go in…when implementing a risk management process.…You can't leapfrog any steps and expect it to work.…There is a process,…and it goes a little something like this.…First, you have to start a risk management process…by identifying and measuring risks.…
So you don't waste time trying to fix something…that is misspecified.…
Jason Schenker of Prestige Economics discusses nine types of corporate risk, including financial and nonfinancial risks. He explains the difference between direct risks that companies face constantly, as well as indirect risks that usually come from vendors, competitors, and counterparties. Then he covers how risks are typically resolved, either by elimination (divestiture or acquisition), transfer (hedging or insuring), offset (creating a natural hedge), or ownership (keeping the exposure). Finally, he reviews how corporations can actively measure and monitor risk by appointing dedicated risk managers, officers, and committees.
- Understanding risk in corporations
- Risk management process
- Nine different types of corporate risks
- Financial market risks
- Direct and indirect risks
- Risk management solutions
- How corporations actively manage risk