1. Welcome to
Risk Management

2. Learning Objectives Understand the definition of risk
Learn how to assess and control your company’s risk
Be able to implement systems for keeping risks under control S1

3. Agenda Introduction 30 minutes Module 1: Defining Risk 100 minutes
Break
10 minutes
Module 2: Assessing the Risks
110 minutes
Lunch Break
Module 3: Managing the Risks
Module 4: Controling the Risks
125 minutes
Conclusion
15 minutes S2

4. What Is Risk?
Accepting the risk
Avoiding the risk S3

5. Risk = Probability x Damage

6. Activity: Defining Risk
Find a partner
Read the case study on p. 14
Discuss questions on p. 15 (10 min.):
What was your definition of risk before?
How did you form this definition? S5

7. A Typology of Risk S6

8. Activity: Classifying Risks
Find a partner
Read the case study on p. 18
Identify each type of risk at Snow Valley (10 min.)
Work individually; classify risks your company faces (5 min.)
Share the risks you and your partner identified (5 min.) S7

9. Case Study: Classifying Risks
Form groups of 3
Read Snow Valley information on p. 23
Analyze, describe risks from poor snowfall, using pp
Record group's responses on p. 23 (15 min.)
Share responses with whole class S8

10. Risks in Ignoring Interdependencies
Does not use resources optimally
May allow unrecognized risk to emerge
Gives false sense of security
Could lead to eventual demise S9

11. Risk Mapping Start with brainstorming The list may be long!
Identify core risks
Risk = Probability x Damage
S10

12. Activity: Risk Mapping
Form groups of 3
Read and discuss case study on p. 39
Answer questions at bottom of p. 39
Share group responses with whole class
S11

13. Activity: NPV and Real Option Theory
Form 4-6 groups
Half the groups read pp. 45 and 46 (NPV)
Half the groups read pp. 47 and 48 (Real Option Theory)
Discuss for 15 min.
NPV groups explain their method, benefits, and drawbacks
Real Option Theory groups explain their method, benefits, and drawbacks
S12

14. Case Study: Snow Valley
Form groups of 3
Read the case study on p. 53
Complete the activity on p. 54
After 15 min., groups present their responses
S13

15. Legal Risk in Your Business
Include legal risk segments
Categorize your legal risks
Some business have higher exposure to legal risk
Some businesses have higher potential losses
Some companies set aside a litigation provision
S14

16. Transferring Risks Transferring risk is outsourcing it
Doesn’t necessarily eliminate risk
S15

17. Other Options
Avoid or eliminate risk
Mitigate risk
S16

18. Risk Tolerance
Risk tolerance is different for every individual and company
Risk is becoming less accepted
Attempts to reduce risk are becoming exceedingly costly and less useful
A certain amount of residual risk will always remain
S17

19. Practice for the Real Thing
Practice can save lives
Establish contingency plans for all accepted risks
S18

20. Crisis Management Activity
Read pp. 74 and 75
Receive handout with question and answer spaces
Create a “test” question based on pp. 74 and 75
Write question on top half; question and answer on bottom half
Separate halves; keep bottom half as answer sheet
Form groups of 3-5
Pass your question to the person on your right
Write an answer to the question you receive
Hand the question back to its creator for “grading”
Group with the most correct responses wins!
S19

21. Models vs. Common Sense Models fall short
Scorecards attempt to present indicators
Find a balance
S20

22. Activity: Reducing Legal Risk
Find a partner
Receive handout with questions (H2)
Pairs answer questions using pp (10 min.)
Whole class reviews answers against answer sheet
Prizes to pair(s) with most correct answers
S21

23. Management Responsibilities
Planning
Organization
Involvement
Control
S22

24. A Posteriori Controls
Expectations derived from experience
S23

25. Anticipatory Controls
A desired, anticipated result is monitored constantly
Disadvantage: Results are subjective rather than quantitative
S24

26. Activity: Controls Find a partner
Read pp ; respond to scenarios on p. 95 (10 min.)
Review the authors' responses together
S25

27. Detective, Preventive, and Protective Systems
Detective systems: Find potential problems
Preventive systems: Prevent problems from triggering others
Protective systems: Limit potential damage
S26

28. Organization of Financial Audits
Mandatory for publicly traded companies
Content differs from country to country
Audit committee is formed by nonexecutive directors
S27

29. Case Study: Management Audit at Snow Valley
Form groups of 3-5
Read pp
Complete diagram on p. 110 (10 min.)
10 minutes for the activity
S28

30. Case Study: CRO Wanted Form groups of 3-5 Read pp. 111-113
Complete “ideal candidate” description on p. 113
10 minutes for the activity
S29

31. Implementing a Reasonable Approach
Create incentive for improvement
Remember environmental risk
Customize IRM for your company
S30

32. Know and Watch the Law Imagine the worst-case scenario
Anticipate the risks
Be knowledgeable
Use legal help when necessary
S31