Workshop: Risk Assessment

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Workshop Risk Assessment

• held by Catrin Lind Ebert

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Risk Assessment

• The risk assessment allows an entity to consider
  the extent to which potential risks have an
  impact on achievement of objectives. Risks that
  are a result of an event that occurs.
• Management assesses risks from two perspectives
• Likelihood
• Impact
• And also uses a combination of qualitative and
  quantitative methods.

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Risk Assessment - risks

• Take 20 minutes to consider what risks could be a
  result of certain identified events within your
  area of operations that affects how you reach
  goals?
• Follow through on yesterdays workshop of event
  identification.
• Take 20 minutes to discuss and assess what
  likelihood and impact these risks have of
  occurring?
• Use a scale of 1 5 where 1 is very unlikely and
  5 is highly likely etc.

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Techniques in Risk Assessment

• Illustrations of inherent and residual risk
  assessments
• Qualitative techniques
• Quantitative techniques

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Questions to consider

• Inherent risk is the risk to an entity in the
  absence of any actions management might take to
  alter either the risks likelihood or impact.
• In linking the risks to identified events (and
  objectives), which are the inherent risks that
  you face?
• What is the likelihood and impact on the
  organisation of the inherent risks?
• Could something be done to reduce the inherent
  risk?
• Residual risk is the remaining risk after
  managements response to the inherent risk.

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Risk assessment techniques example cont.

•                             

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Qualitative and quantitative techniques -
assessment

• Qualitative
• These techniques are done in subjective terms and
  depends largely on the knowledge and judgement of
  the individuals involved, their understanding of
  potential events, and the surrounding, context
  and dynamics.
• Quantitative
• When the risks could be quantified and when
  credible data for making quantitative
  assessments.

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Example ESV Risk assessment

• Model for risk analysis at ESVs department for
  accounting and internal audit
• Consider objectives for each unit
• Identify events that affect the reaching of
  objectives list possible events that could lead
  to a risk that complicates operations.
• Each risk is graded in a scale between 1 to 5

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Example ESV cont.

• Calculation of risk value by multiplying the
  values of likelihood and impact i.e. 3 (L) x 4
  (I) 12 (risk value or risk factor)
• Prioritising between the different risks
  according to risk value and impact, e.g. all
  impact values of 5 are considered.

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Example ESV cont.

• The identified and valued risks may be completely
  assembled within units but should be prioritised
  when presented to upper management
• There are different actions or a combination of
  risk responses that can be taken according to the
  following
• Avoid
• Reduce i.e. minimise or eliminate
• Share
• Accept
• Decision taken by manager

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Example ESV cont.

• After all risks have been given a risk response
• a follow-up is made and compared to the
  performance contract to assess if the risk has
  been taken into consideration.
• A responsible staff member should be selected in
  making certain that measures are carried out in
  handling the risk
• All relevant risks should be connected to a
  measure.