Download - Risk Management Strategies 2019 - SAIPA
Risk Management Strategies 2019
Risk Management Strategies
CPD - COMMERCE & INDUSTRY
2019
RISK MANAGMENT STRATEGIES 2
Risk Management
RISK MANAGMENT STRATEGIES 3
▪ Risk management enables an organisation to evaluate all relevant
business and regulatory risks and controls and monitor mitigation
actions in a structured manner
▪ With the recent increase in regulatory mandates and increasingly
activist shareholders, many organisations have become sensitized to
identifying and managing areas of risk in their business: whether it is
financial, operational, IT, brand or reputation related risk.
▪ These risks are no longer considered the sole responsibility of
specialists - executives and the boards demand visibility into exposure
and status so they can effectively manage the organisation’s long-term
strategies.
▪ As a result, companies are looking to systemically identify, measure,
prioritise and respond to all types of risk in the business, and then
manage any exposure accordingly.
Risk Management
RISK MANAGMENT STRATEGIES 4
Types of Risks
RISK MANAGMENT STRATEGIES 5
Types of Risks
RISK MANAGMENT STRATEGIES 6
Business Risks
RISK MANAGMENT STRATEGIES 7
Strategic Risks
RISK MANAGMENT STRATEGIES 8
Governance Risk
RISK MANAGMENT STRATEGIES 9
Compliance Risk
RISK MANAGMENT STRATEGIES 10
Compliance risk is the risk of legal or
regulatory requirements, material
financial loss, or loss to reputation a
business may suffer as a result of its
failure to comply with laws,
regulations, rules, related self-
regulatory organisation standards,
and codes of conduct applicable to
its business activities.
Compliance Risk
RISK MANAGMENT STRATEGIES 11
Compliance Risk
RISK MANAGMENT STRATEGIES 12
Financial Risks
RISK MANAGMENT STRATEGIES 13
Financial Risks
RISK MANAGMENT STRATEGIES 14
Financial Risks
RISK MANAGMENT STRATEGIES 15
Financial Risks
RISK MANAGMENT STRATEGIES 16
Interest Rate Risk
▪ The amount at risk is the function of
the magnitude and direction of
interest rate changes and the size
and maturity structure of the
mismatch position
▪ If interest rate rise, the cost of funds
increases more rapidly than the yield
on assets, thereby reducing net profit
▪ If the exposure is not managed
properly it can erode both the
profitability and shareholders value
Financial Risks
RISK MANAGMENT STRATEGIES 17
Financial Risks
RISK MANAGMENT STRATEGIES 18
Financial Risks
RISK MANAGMENT STRATEGIES 19
Financial Risks
RISK MANAGMENT STRATEGIES 20
Operational Risks
RISK MANAGMENT STRATEGIES 21
Operating Risks
RISK MANAGMENT STRATEGIES 22
Operating Risks
RISK MANAGMENT STRATEGIES 23
Cyber Risks
RISK MANAGMENT STRATEGIES 24
Cyber Risks
RISK MANAGMENT STRATEGIES 25
Cyber Security
RISK MANAGMENT STRATEGIES 26
Cyber Risks
RISK MANAGMENT STRATEGIES 27
Cyber Risks
RISK MANAGMENT STRATEGIES 28
Cyber Risks
RISK MANAGMENT STRATEGIES 29
International Business Risk
RISK MANAGMENT STRATEGIES 30
Risk Management Framework
RISK MANAGMENT STRATEGIES 31
Risk Management Framework
RISK MANAGMENT STRATEGIES 32
Risk Management - Concept
RISK MANAGMENT STRATEGIES 33
Enterprise Risk Management
RISK MANAGMENT STRATEGIES 34
Enterprise Risk Management
RISK MANAGMENT STRATEGIES 35
Enterprise Risk Management
RISK MANAGMENT STRATEGIES 36
GRC – Implementation Risks
RISK MANAGMENT STRATEGIES 37
GRC – Implementation Strategy
RISK MANAGMENT STRATEGIES 38
Risk Management Strategies
RISK MANAGMENT STRATEGIES 39
Risk Management Strategies
RISK MANAGMENT STRATEGIES 40
Risk Management Strategies
RISK MANAGMENT STRATEGIES 41
Risk Management Strategies
RISK MANAGMENT STRATEGIES 42
Risk Management Strategies
RISK MANAGMENT STRATEGIES 43
Risk Management Strategies
RISK MANAGMENT STRATEGIES 44
Risk Management Strategies
RISK MANAGMENT STRATEGIES 45
Risk Management Strategies
RISK MANAGMENT STRATEGIES 46
Risk Management Strategies
RISK MANAGMENT STRATEGIES 47
Risk Management Strategies
RISK MANAGMENT STRATEGIES 48
Risk Management Strategies
RISK MANAGMENT STRATEGIES 49
Risk Management Strategies
RISK MANAGMENT STRATEGIES 50
Risk Management Strategies
RISK MANAGMENT STRATEGIES 51
Risk Management Strategies
RISK MANAGMENT STRATEGIES 52
Risk Management Strategies
RISK MANAGMENT STRATEGIES 53
SME Risk Management
RISK MANAGMENT STRATEGIES 54
SME Risk Management
RISK MANAGMENT STRATEGIES 55
Fraud - Triangle
RISK MANAGMENT STRATEGIES 56
Fraud - Triangle
RISK MANAGMENT STRATEGIES 57
Fraud – Ethical Risk
RISK MANAGMENT STRATEGIES 58
Financial Statement Fraud
RISK MANAGMENT STRATEGIES 59
▪ Financial statement fraud, involves the intentional mis-statement
or omission of material information from the organisation’s
financial reports - these are cases of “cooking the books or
figures”.
▪ Financial statement fraud cases often involve the reporting of
fictitious revenues or the concealment of expenses or liabilities in
order to make an organisation appear more profitable than it
really is.
Financial Statement Fraud
RISK MANAGMENT STRATEGIES 60
Financial Statement Fraud
RISK MANAGMENT STRATEGIES 61
Financial Statement Fraud
RISK MANAGMENT STRATEGIES 62
Financial Statement Fraud
RISK MANAGMENT STRATEGIES 63
Effects of Financial Statement Fraud
▪ Undermines the reliability, quality,
transparency and integrity of the
financial reporting process
▪ Jeopardises the integrity and
objectivity of the accountancy
profession
▪ Diminishes the confidence of the
capital markets as well as market
participants in the reliability of
financial information
▪ Makes capital market less effect
Financial Statement Fraud
RISK MANAGMENT STRATEGIES 64
Costs of Financial Statement Fraud
▪ Adversely affects the nation’s
economic growth and prosperity
▪ Results in large litigation costs to the
organisation
▪ Destroys careers of the individuals
involved
▪ Causes bankruptcy or substantial
economic losses to the organisation
Financial Statement Fraud
RISK MANAGMENT STRATEGIES 65
Reducing Financial Statement Fraud
▪ Promote strong values throughout the
organisation
▪ Clearly define prohibited behaviour
▪ Provide regular training to all employees
communicating prohibited behaviour
▪ Have confidential advice and reporting
mechanisms (whistle blowing)
▪ Communicate that integrity takes priority
over gaols
▪ Ensure management practice what it
preaches
▪ The consequences of violating the rules
and punishment to violators should be
clearly communicated
Financial Statement Fraud
RISK MANAGMENT STRATEGIES 66
Reducing Financial Statement Fraud
▪ Maintain accurate and complete internal
accounting records
▪ Carefully monitor business transactions
and interpersonal relationships between
the financial units
▪ Establish physical security systems to
secure company assets
▪ Divide important functions among
employees
▪ Encourage strong supervisory and
leadership relationships to enforce
accounting procedures
▪ Establish clear and uniform accounting
procedures with no exception clauses
RISK MANAGMENT STRATEGIES 67