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Identifying Risk

BSBRSK401 Identify risk and


apply risk management processes

Zarah Institute of Education ZIE


Purpose of this presentation

At the end of this session, you should know how to:

define risk and risk management

identify the context for risk management

identify risks using tools, ensuring all reasonable steps have been taken to
identify all risks

document risks in accordance with organisational and legal requirements.

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Scenario

MacVille will need to:

establish the internal and external context


of risks facing the company

identify all risks to achieving strategic


goals.

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What is risk and risk
management?

Probability Consequence
of risk of risk

Organisational
objectives

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The risk management process

Establishing the context

Risk assessment

Monitoring and review


Communication and

Risk identification
consultation

Risk analysis

Risk evaluation

Risk treatment
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Establish the context of risk

Internal context External context


The internal environment The external context
encompasses the operations includes the following
and inner workings of the
organisation: factors:
processes political environment
policies and procedures economic environment
culture social environment
objectives and strategies legal environment
resources.
technological factors
affecting the business.
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Consider the legislative context

Key legislation includes:

work health and safety


legislation

Privacy Act 1988

anti-discrimination
legislation.

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Identify risk using tools

Identifying risk

Methods for identifying project risk.

Tip: Checklists are a great way to identify risk.

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Document identified risks

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The next steps

You should now:


complete the self-paced activities in
Section 1 of the Student Workbook
read Section 2 of the Student Workbook.

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Analysing and
Evaluating Risk
BSBRSK401 Identify risk and
apply risk management processes

Zarah Institute of Education ZIE


Purpose of this presentation

At the end of this session, you should


know how to:
categorise risk and determine level
of risk
consult with risk stakeholders

document analysis and evaluation


processes and outcomes.
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Scenario

MacVille will need to:


report on analysis and
evaluation of threats to
company objectives
identify and manage
all stakeholders in the
risk management
process.
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Define types of risk analysis

Qualitative Semi-quantitative Quantitative

verbal, not uses numbers to numerical


numerical define scales
involves
initial screening to may be more sophisticated
determine if more precise and less mathematical
rigorous, open to varied techniques, for
quantitative analysis interpretation example:
is required
for example, risk statistical
information rich matrices using probability
numeric scales
for example, risk value
matrix in Student estimations Zarah
for
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analysis
Categorise types of risk

certain versus uncertain Give an


example of a
speculative versus pure
risk of which
internal versus environmental you know the
time but not
the event.
A. Known when B. Known when
and known what and unknown what

RISK

C. Unknown when D. Unknown when and


and known what unknown what

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Establish the level of risk

Probability:
rare
Probability x
frequent. consequence =
Consequence: impact

insignificant
catastrophic.

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Risk matrix

CONSEQUENCE

Insignificant Minor Moderate Major Catastrophic

Almost
HIGH HIGH EXTREME EXTREME EXTREME
certain

Likely MEDIUM HIGH HIGH EXTREME EXTREME


LIKELIHOOD

Moderate LOW MEDIUM HIGH EXTREME EXTREME

Unlikely LOW LOW MEDIUM HIGH EXTREME

Rare LOW LOW MEDIUM HIGH HIGHZarah


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Evaluate the risk
Describe the
circumstances in
which you would
accept a risk.

Extreme IMMEDIATE senior management action

Very High Senior management attention needed

Action plan needed with responsibilities


High allocated

Medium Risk requires only monitoring and review

Low Risk accepted but not ignored Zarah


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Consult with risk stakeholders

Internal External
stakeholders stakeholders

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Document analysis process and
outcomes

Organisations will often capture


information about risk identification,
analysis, and evaluation on:
risk registers
management reports.

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The next steps

You should now:


complete the self-paced activities in
Section 2 of the Student Workbook
read Section 3 of the Student Workbook.

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Controlling Risk
BSBRSK401 Identify risk and
apply risk management processes

Zarah Institute of Education ZIE


Purpose of this presentation

At the end of this session, you should know


how to:
determine control measures for all risks

determine responsibilities for risk

prepare a risk management plan

implement the risk management plan.

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Scenario

Recommendations for control of risk at


MacVille include:

implementing a
compliance
management system
increasing insurance.

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Determine control measures
Strengths and
Treatment options: weaknesses of each
option:
avoid the risk
reduce the likelihood Consider, for example:
of the risk contracts
cost effectiveness
reduce the
consequences economic and social
environment
share the risk equity
retain the risk individual freedom
jurisdictional authority
objectives.
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Hierarchy of control
Can you
eliminate Yes: then eliminate the risk
the risk?
Can you
Yes: then reduce the risk (e.g. by
reduce
substitution)
the risk?

Can you isolate Yes: then isolate the risk (e.g. guards and
the risk? barriers)

Can you
Yes: then introduce administrative controls
reduce the risk
(e.g. safe operating procedures)
by control?
Then provide
personal According to AS/NZ standard Zarah
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Determine responsibility for
risk
Consider the following actions:
Placing specific people who are to be
accountable for the development,
implementation and maintenance of the risk
management process.
Specifying individuals with the role of
implementing risk treatment, maintaining risk
controls and reporting relevant information.
Providing appropriate levels of recognition,
reward, approval and authority. Zarah
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Prepare and implement risk
management

Risk treatment action


Risk planning: plan:
organisational approach assigning responsibility
management and responsibilities
components: procedures, gathering resources
practices, assignment of
responsibilities, sequence communicating plans
and timing of activities, following
monitoring, review and
organisational
reporting activities
procedures for risk
resources and budget. management
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Risk treatment action plan

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The next steps

You should now:


complete the self-paced activities in
Section 3 of the Student Workbook
read Section 4 of the Student Workbook.

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Monitoring and Reviewing
Risk
BSBRSK401 Identify risk and apply risk management
processes

Zarah Institute of Education ZIE


Purpose of this presentation

At the end of this session, you should know


how to:
regularly review implemented treatment/s
against measures of success
monitor and review management of risk in
own area of operation
use review results to improve the treatment
of risks.
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Scenario

MacVille will need to:

monitor results

consult widely

work towards continuous improvement of


risk management processes.

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Regularly monitor and
review risk
To keep your risk management planning up-to-
date, ensure you do the following.
review it on a regular basis
evaluate changes within your organisation
and its environment.
continually improve the risk management
processes across the organisation on the
basis
of review.
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Review performance against
measures of success

Some possible measures include:


a decline in residual risk values
progress towards a specific project
objective
the extent of implementations of risk
treatments
decline in total cost of risk
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reductions in the impact of risk.


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Performance measures

Output (outcome or
Input (managerial): result):
For example: For example:

number of reviews the number of


completed accidents

the completion of an the dollar value of


savings
accident report for
each accident. cost of programs
revenue increases or
decreases.
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MacVille performance
measures
Result Area Decline in total cost of risk

Measure Dollars spent on risk

Targets (for CEO) reduction of total loss as a


result of risk across organisation of 5%
against previous year (output measure)
(for manager of production) reduction
of workers compensation claims by 10%
(output measure)

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Monitor and review risk in own
area of operation

Depending on your position or role within the organisation, monitoring activities


can include:

team meetings to consult on risks


participating in or undertaking risk audits
documenting risks and risk evaluation
producing reports on risk treatment
producing reports to evaluate the overall success of
risk management systems against strategic objectives. Zarah
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Improve risk management

Consider the following questions:

Are responsibilities clearly defined?


What information is required to improve risk
assessment?
What lessons may be learned from previous risk
management activities? Failures? Successes?
What changes have occurred in the context of
the risk?
What future risks are on the horizon?
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The next steps

You should now:


complete the self-paced activities
in Section 4 of the Student
Workbook
complete any outstanding
activities from other sections
complete assessment tasks.
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