Fundamental Concepts of Risk Management
Definition of Terms
 Objectives – defined & intended outcomes.
 Control – increase the likelihood of achieving objectives.
 Governance – ensure entity effectively and efficiently directs toward meeting the objectives.
 Residual risk – after a risk response.
 Opportunity – event will occur and positively affect the achievement of objectives.
 Risk Appetite – acceptable amount of risk.
 Risk Tolerance – maximum amount of risk an organization is willing to take.
Risk
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possibility of an event occurring that will have an impact on the achievement of objectives.
Measured through: impact and likelihood.
Occurring over a predefined time period
Factors that define impact rating:
o Financial effect
o Reputation
o Ability to achieve key objectives