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RISK MANAGEMENT

it requires the modification of the management style, from a corrective one to a reactive one, in order to identify and mitigate the risks and facilitates the efficient and effective achievement of the objectives of any organization, ensuring the basic conditions for a healthy internal control.

The risks must be identified and evaluated, from the perspective of the combination between the probability that something (the risk) will happen and the impact (consequence on the objective) that the materialization of the respective possibility will have. The result of evaluating the probability-impact combination is called risk exposure. The risk management goes through the stages of identifying the inherent risk associated with the activities carried out in any field, the risk assessment and analysis, the risk hierarchy and the measures regarding its reduction and management are established. The financial analysis of the costs associated with risk management is the next step with risk assessment and closing the resolved risks.

Activities carried out in order to identify risks

  • Studying the problems involved in the activities of the organization, with the effect of not achieving the general or specific objectives
  • Identification of the causes that generated the problems, the probability of their occurrence and the impact on the objectives
  • Estimating the probability of their materialization and the impact on risk, using the step ladder
  • The risks must be identified at any level where it is noticed that there are consequences on reaching the objectives and specific measures can be taken to solve the problems, raised by the respective risks

RISK CATEGORIES

  • risks which depend on external environment: political, economic, socio-cultural, technological, legal, environmental
  • operational risks regarding: the activity; active, human, material, financial, informational resources; regularity and fairness; flexibility and adaptability; social security, information;
  • risks which depend on change regarding: new strategies; new politicians; new projects

THE COMBINATION BETWEEN THE ESTIMATED LEVEL OF PROBABILITY AND THE ESTIMATED LEVEL OF THE IMPACT CONSTITUTES RISK EXPOSURE

based on which the risk profile is realized. Assessing the probability of materializing the risk means determining the chances of occurrence of a specific result. The evaluation of the impact on the objectives in the event of risk materialization represents the analysis of the consequence on the expected objectives (results), which may be, depending on the nature of the risk, negative or positive.

EXPOSURE TO RISK

it represents the consequences, as a combination of probability and impact, that an organization can feel in relation to the predetermined objectives in case the risk would materialize.

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