Risk Management - Vocabularies

Critical event
Corporate governance – CG relates to how well the company is managed – Good corporate governance, is about Responsible and Transparent decision making and Leadership.
Ex : Good corporate governance is especially important in times of Economic Instability.

Compliance – Following rules, regulations and laws is compliance.
Eg : Our lawyers have reviewed the contract to ensure that we are in full compliance with Industry regulations.

Due Diligence
When we do all the necessary research before make a decision or signing a contract, we are performing due diligence
Due diligence might show that people were not honest about profit or potential risk
Ex: Before buying a business, you must perform due diligence on both business and seller.

Exposure – In Risk management, exposure is about how much risk you face.
High exposure means you face a lot risk and a potential damage.

Risk appetite – The amount of risk or level of exposure, that a company is willing to accept is its risk appetite.
Ex : people or company with a high risk appetite such as venture capitalists, usually anticipate great future profit.

Public scrutiny – Scrutiny is close examination or study
Ex: After scandals in companies such as Enran, corporate accounting is subject to much greater public scrutiny.
Diagnose – When we diagnose the problem, we find the cause or reason for the problem.
Critical Incidence Analysis- Is a set of techniques that are used to find and solve the problems in a company, a process or a System.
Ex: CIA has provided our company with the tools to deal with big problems when they happen.

Volatility

Natural disaster

External and Internal Risks
There may be a risk management strategy for the organization as a whole, which attempts to account for External and Internal risks to the company.
Ex
External risk – Global Economic condition / Competitor
Internal risk – Problem employees / Budget overrun.

Project Appraisal

When you examine a project to figure out whether Good or Bad, Risk or safe, you are doing Project appraisal.
Conducting project appraisal will help a company determine which project or product will make money.

Predict / foresee – To predict or foresee is to look into the future and try to guess what will happen. Ex : Smart investors try to predict the changes in the market before they happen.

Hazard - The specific situation that might cause damage or harm to the company in future are called Hazards.
Ex : Employee dissatisfaction / Product failure / Increased competition.

Avoid Risk – Ex avoid invest in a particular country

Transfer Risk – When we share or give it to another company, we are transferring that risk. Risk transfers almost and always means buying Insurance.

Mitigate risk - Another way to deal with risk is mitigate it or decrease the potential damage of a risk that can be avoided.
Ex: Companies use antivirus software to reduce the probability and damage of computer virus.

Retain Risk : A company may retail or Accept risk if they see the potential from profit or advantages.

Disclosure : It is showing or revealing Information, usually negative Information about a situation.

Reputation management : Companies must pay close attention to their public image and what people think.