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CIMA Paper P2 Advanced Management Accounting Ian Kusano and Nathi - - PowerPoint PPT Presentation
CIMA Paper P2 Advanced Management Accounting Ian Kusano and Nathi - - PowerPoint PPT Presentation
CIMA Paper P2 Advanced Management Accounting Ian Kusano and Nathi Thela 13 Chapter Risk Management 1 Risk What is risk ? ...the chance that future events or results may not be as expected Why incur risk ? To gain competitive
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Risk
What is risk ?
- ...the chance that future events or results may not be as
expected Why incur risk ?
- To gain competitive advantage
- To increase financial return
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CIMA’s Risk Management Cycle
Identify risk areas
Establish risk management group and set goals
Understand and assess scale of risk Develop risk response strategy Implement strategy and allocate responsibilities Review and refine process Information for decision making Implementation and monitoring of controls
Business strategy
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Risk Identification
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Risk Mapping
Impact/Consequences Probability/ Likelihood
Low High High Low
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Risk Treatment Methods
- Avoid risk
- Transfer risk
- Pool risks
- Diversification
- Risk reduction
- Hedging risks
- Risk sharing
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Risk Mapping : TARA framework
Impact/Consequences Probability/ Likelihood
Low High High Low