Risk Measurement and Risk Management (A recession Economy in Context) How executives can adequately measure and Manage Risks and Keep Company Afloat. Bein a presentation I delivered as part of the One week Long training program for Senior and Mid level Management Executives of PHRC a subsidiary of NNPC

1. Ajibade A OluwaseunAjibade A Oluwaseun
Penexus Consulting LagosPenexus Consulting Lagos
(A presentation for Senior and Mid level executives of PHRC a subsidiary of NNPC)(A presentation for Senior and Mid level executives of PHRC a subsidiary of NNPC)

2. Recap
What we know
What we do not know
What we shall learn

3. Managing risk is at the core of managing any
organisation
Risk measurement and quantitative tools are very
critical aids for supporting risk management
The duty of every manager within any organisation
before anything else is managing risks

4. Managing Risks(Recap)
Managing risks is about making tacticla and strategic
decisions to control those risks that should be
controlled and to explore opportunities that could be
exploited
It is the art of managing people, processes, and
institutions as it is also the science of measuring and
quantifying risks

5. Why is Risk Measurement
Necessary?
Risk measurement is necessary to support the
management of risks.
Risk measurement is the is the specialised task of
quantifying and communicating Risk

6. Goals of Risk Measurement
Uncovering known risks(Risks that can be identified
and understood)
Making the Know risk easy to see understand and
compare
Trying to understand and compare the Unknown or
anticipated risks

7. Types of Investment risk
Market Risks or systematic risks: is the posssibility of
an investor tto experience losses due to factors that
affect overall performance.
Specific Risks (Unsystematic risks): tied directly to
the performance of a particular security and can be
protected against through investment diversification

8. Operational Risks(KRIs)
Key risk indicators, operational risk, risk mitigation—
these terms pop up in most content focused on risk
management. But, these terms aren't often used in a
way that provides guidance on improving processes.
We all need to understand what role KRIs play in risk
mitigation, but do we all know how to get started
turning concepts into action?

9. KRI defined
Key risk indicators (KRIs) are an important tool
within risk management and are used to enhance the
monitoring and mitigation of risks and facilitate risk
reporting

10. Operational Risks
Operational risk is defined as the risk of loss resulting
from inadequate or failed internal processes, people
and systems, or external events. Operational KRIs are
measures that enable risk managers to identify
potential losses before they happen.

11. Effective KRIs should be
Measurable - metrics should be quantifiable (e.g.,
number, count, percentage, dollar volume, etc.).
Predictable - provide early warning signals.
Comparable - track over a period of time (trends).
Informational - measure the status of the risk and
control.

12. Leading & lagging KRIs
Leading KRIs are measures that are considered
predictive in nature. They are derived from metrics
that can help to forecast future occurrences. Lagging
KRIs are metrics based on historical measures. These
help to identify trends in the firm.

13. Importance of KRIs
KRIs play an important role in risk management by
predicting potential high risk areas and enabling
timely action.
KRIs enable firms to:
Identify current risk exposure and emerging risk
trends.
Highlight control weaknesses and allow for the
strengthening of poor controls.
Facilitate the risk reporting and escalation process.
Operational risk management adds value to the firm.

14. Session tied-in
A risk that cannot be Accurately measured cannot beA risk that cannot be Accurately measured cannot be
properly managedproperly managed

15. Thank You