Risk analysis may be performed as a two stage process


Risk analysis may be performed as a two-stage process with qualitative
analysis performed first as a lower cost initial screen, followed by more
quantitative analysis of the most significant risks identified in the first stage,
if the risks are suitable for quantitative analysis.

Both qualitative and quantitative analysis methods have advantages and
disadvantages. A risk manager should be aware and adopt the method
best suited to the risk being analysed and the capabilities of the
organisation.

Common qualitative
methods

Interviews

Cross-functional workshops

Surveys

Benchmarking

Scenario analysis
•
Cross-functional interviews, surveys and workshops are preferred to
ensure the full effects of risks are captured across organizational silos
•
Benchmarking other organizations may require adjusting the likelihood or
impact for the size and scope of your organization to improve relevance
•
Surveys may have low response rate and quality of understanding may
vary across respondents. Workshops should be used in conjunction with
surveys to improve information depth and quality
•
Scenarios are conducted in strategic planning and are also useful for
assessing risks and tying them back to strategic objectives
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The Delphi Technique
explained
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5
What it is

The Delphi Technique is a structured survey method, that comprises a
systematic and iterative survey of opinions drawn from a panel of experts.
Why it is useful

The Delphi Technique helps reduce bias, encourage dialogue between
experts and speeds consensus, and reduces the risk that any one
person from having undue influence on the opinion of the group.
How it works

Experts answer questionnaires in two or more rounds. After each round,
a facilitator provides an anonymised summary of the experts' forecasts
from the previous round as well as the reasons they provided for their
judgments. Thus, experts are encouraged to revise their earlier answers
in light of the replies of other members of their panel.

The process is stopped after a predefined stop criterion (e.g. number of
rounds, achievement of consensus, stability of results) and the mean
or median scores of the final rounds determine the results.

Cash Flow at Risk (CFaR) defined
(refer COSO)
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6

Cash Flow at Risk is a quantitative risk measure built on a causal
model where specific risk factors drive future uncertainty of key
financial cash flow or earnings objectives.

Each risk factor is modelled in detail and incorporated into an overall
model of the firm’s cash flows or earnings.

Unlike simple budgeting or extrapolating past experiences,
CFaR gives insight into the potential variability of future cash
flows and earnings.