Learn to describe the attributes and order of a risk management process, including identifying, measuring, owning, addressing, implementing, and monitoring risks.
- When I talk to people about corporate risk,…most of them want to immediately jump…to a topic like hedging…without knowing what their risks actually are.…This is like buying racing stripes…or spinning rims for a car you don't even own yet.…You see, risk management starts not with answers,…but with questions, and there are three big ones.…What are your risks?…What are you going to do about your risks?…And is your strategy effective?…Let's look at six steps…of an effective risk management process.…
These include identifying your risks,…measuring your risks, owning your risks,…addressing your risks,…implementing your risk management solutions,…and finally, monitoring your risk management solutions.…These six steps should answer our three big questions.…So, what are your risks?…As you start a risk management project,…you need to make sure…that you're solving for the right problem.…This part of the risk management process…includes identifying your risks.…
It may seem like a simple thing,…but I'll discuss the nine different risks…
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