BFF5902 Lecture Week 12 Sem2 18.pptx - BFF5902 Introduction...

BFF5902
Introduction to Risk Principles
Lecture 12 – Review and Exam
Preparation Semester 2, 2018

How to prepare for your final
assessment
2

We have covered a large amount of material. This pack is a summary of
weeks 1 to 10.

To help guide your revision please refer to the separate document guide
“Key Topics for Review” available on Moodle.

Past exams will provide good practice and indicate the style of question
expected.

The discussion questions will also give good guidance and it is
recommended that you practice these.

In general, you will be well prepared if you can:
–
Explain key definitions.
–
Understand well the key risks mentioned in the Key Topics for
Review.
–
Have business examples in mind that help illustrate key concepts.

Themes covered within
BFF5902
Weeks 4 -7
Risk Management Process
Weeks 8-10
The Management of Key Risks
Weeks 1 -2
What is risk?
Week 3
Risk Architecture
3

Topics by
week
4
Week Number Title
1 Overview of risk, categories of risk and risk frameworks
2
Perceptions of risk, decision-making under conditions of risk, biases and
heuristics
3 Risk management architecture
4 Risk context and identification
5 Risk assessment (introduction)
6 Risk assessment (continued)
7 Risk treatment and monitoring
8 Strategic risk and operational risk
9 Financial risk
10 Compliance risk including environmental risks and political risk
11 Case Study Analysis
12 Review and Exam Preparation

Weeks 1
& 2

6
AU/NZ ISO31000
definition of risk
ISO31000 definition of risk:
the effect of uncertainty on objectives
The benefit of this definition is that it creates a workable business
definition that involves measurable assessments of uncertainty and
likelihood separate from how an individual may feel about the risk.
Even if not perceived, the risk can be present. Perceptions influence
the assessment but not the definition of a risk.

MONAS
H
BUSINE
SS
7
Defining
risk
DEFINITION:
▪
Risk is "the effect of uncertainty on objectives“.
▪
This is a commonly accepted business definition.
▪
It is an objective and personal value neutral definition of
risk, recognizing that risks involve both threats and
opportunities
▪
A risk is the expression of the likelihood and impact of an
event with the potential to affect the achievement of an
organization's objectives
▪
Implies that, as a minimum, some form of quantitative
and/or qualitative analysis is required for assessing risks.

Definition of
uncertainty
8
▪
Uncertainty is the deficiency of information related to
understanding or knowledge of an event, its
potential consequence on goals, and its likelihood of
occurring.
▪
In order for risk to be present, two essential elements
must be present:
–
Objectives (financial and non-financial)
–
Uncertainty (internal and external sources)

The relationship between risk
and uncertainty
Risk
•
Risk arises when there is the
potential for unexpected
outcomes, i.e., deviation from
planned or expected.