Risk assessment and management
Expert-defined terms from the Professional Certificate in Risk Management Psychology course at London School of Business and Administration. Free to read, free to share, paired with a globally recognised certification pathway.
Risk Assessment and Management #
Risk Assessment and Management
Risk Assessment and Management is the process of identifying, evaluating,… #
Risk Assessment and Management is the process of identifying, evaluating, and prioritizing risks followed by the application of resources to minimize, control, and monitor the impact of these risks.
Risk Assessment is the identification, analysis, and evaluation of potent… #
It involves identifying potential threats and vulnerabilities, assessing the likelihood and impact of these risks, and prioritizing them based on the level of risk they pose.
Risk Management is the process of developing strategies to mitigate, avoi… #
It involves implementing policies, procedures, and practices to reduce the likelihood and impact of risks on an organization or individual.
Risk is the potential for loss, damage, or harm resulting from exposure t… #
It can be financial, reputational, operational, or strategic in nature.
Hazard is a potential source of harm or adverse health effect on a person… #
It can be natural (e.g., earthquakes, floods) or man-made (e.g., chemical spills, cyber-attacks).
Vulnerability is the susceptibility of an organization or individual to b… #
It can be influenced by factors such as infrastructure, resources, knowledge, and communication.
Threat is a potential event or circumstance that can cause harm or damage… #
It can be intentional (e.g., terrorism, fraud) or unintentional (e.g., natural disasters, accidents).
Impact is the effect or consequence of a risk materializing #
It can be financial, operational, reputational, or legal in nature.
Likelihood is the probability of a risk occurring #
It is usually expressed as a percentage or a qualitative measure (e.g., low, medium, high).
Residual Risk is the level of risk that remains after risk treatment meas… #
It represents the risk exposure that an organization or individual is willing to accept.
Risk Appetite is the amount and type of risk that an organization or indi… #
It is influenced by factors such as risk tolerance, culture, and strategic goals.
Risk Tolerance is the level of risk that an organization or individual is… #
It is the maximum acceptable level of risk exposure that aligns with the risk appetite.
Risk Mitigation is the process of reducing the likelihood and impact of r… #
It aims to minimize the exposure to risk and its potential consequences.
Risk Transfer is the process of shifting the financial consequences of a… #
It allows organizations or individuals to transfer the risk to a third party in exchange for a premium.
Risk Avoidance is the strategy of eliminating or withdrawing from activit… #
It involves steering clear of risks altogether to prevent exposure to potential harm.
Risk Acceptance is the decision to acknowledge and retain the risk exposu… #
It is usually considered when the cost of risk mitigation outweighs the potential impact of the risk.
Risk Communication is the process of exchanging information about risks,… #
It ensures that stakeholders are informed, engaged, and empowered to make decisions related to risk.
Risk Monitoring is the ongoing process of tracking, evaluating, and revie… #
It involves monitoring changes in the risk environment and adapting risk management strategies accordingly.
Risk Register is a formal document that captures and records all identifi… #
It serves as a central repository of information for risk assessment and management.
Key Risk Indicators (KRIs) are metrics or parameters that are used to mon… #
They provide early warning signals of potential risk events and help organizations take proactive risk management actions.
Scenario Analysis is a technique used to assess the potential impact of d… #
It involves creating hypothetical situations and analyzing their likelihood and consequences to develop effective risk management strategies.
Business Impact Analysis (BIA) is a process used to identify and prioriti… #
It helps organizations understand the potential impact of disruptions and develop continuity plans to mitigate risks.
Control Measures are actions or safeguards put in place to reduce the lik… #
They can include policies, procedures, training, technology, and physical security measures to prevent, detect, or respond to risks.
Resilience is the ability of an organization or individual to withstand a… #
It involves adapting to changing circumstances, maintaining operations, and bouncing back from adversity.
Compliance is the adherence to laws, regulations, standards, and policies… #
It ensures that organizations operate ethically, responsibly, and in accordance with legal requirements to minimize risks.
Cyber Risk is the potential for harm or loss resulting from exposure to c… #
It poses a significant risk to organizations' information security and operational resilience.
Operational Risk is the risk of loss resulting from inadequate or failed… #
It encompasses risks related to operations, technology, human resources, and external factors that can impact an organization's ability to achieve its objectives.
Financial Risk is the risk of loss resulting from fluctuations in financi… #
It includes risks related to investments, borrowing, financing, and cash flow management.
Reputational Risk is the risk of damage to an organization's reputation,… #
It can result from negative publicity, customer complaints, ethical lapses, or controversial actions that erode stakeholder trust and confidence.
Strategic Risk is the risk of loss resulting from poor strategic decision… #
It encompasses risks related to business strategy, growth, innovation, and market positioning.
Environmental Risk is the risk of harm or damage resulting from environme… #
It includes risks related to sustainability, resource management, and ecological impacts.
Legal Risk is the risk of loss resulting from non #
compliance with laws, regulations, contracts, or litigation. It includes risks related to legal disputes, liabilities, penalties, and regulatory enforcement that can impact an organization's operations and reputation.
Human Risk is the risk of loss resulting from human errors, behaviors, at… #
It encompasses risks related to workforce management, leadership, culture, diversity, and ethics that can impact organizational performance and resilience.
Health and Safety Risk is the risk of harm or injury to employees, custom… #
It includes risks related to occupational health, safety regulations, emergency preparedness, and duty of care.
Supply Chain Risk is the risk of disruption or loss resulting from vulner… #
It includes risks related to sourcing, procurement, inventory management, and global trade that can impact an organization's operations and continuity.
Political Risk is the risk of loss resulting from changes in political, e… #
It includes risks related to government policies, trade agreements, geopolitical events, and civil unrest that can impact business operations and investments.
Compliance Risk is the risk of loss resulting from failure to comply with… #
It includes risks related to regulatory violations, fines, sanctions, legal actions, and reputational damage that can impact an organization's financial stability and sustainability.
Information Security Risk is the risk of loss resulting from unauthorized… #
It includes risks related to data breaches, cyber-attacks, malware, ransomware, and insider threats that can compromise an organization's confidentiality, integrity, and availability of information.
Operational Resilience is the ability of an organization to sustain opera… #
It involves identifying critical functions, dependencies, vulnerabilities, and developing strategies to ensure continuity, recovery, and business as usual in the face of adversity.
Crisis Management is the process of responding to, managing, and recoveri… #
It involves activating plans, resources, communication channels, and coordination mechanisms to mitigate the impact, protect stakeholders, and restore normal operations as quickly as possible.
Business Continuity Planning (BCP) is the process of developing and imple… #
It involves risk assessment, recovery planning, testing, training, and communication to enhance organizational resilience and preparedness.
Risk Heat Map is a visual representation of risks based on their likeliho… #
It categorizes risks into high, medium, and low risk zones to prioritize risk management efforts and allocate resources effectively.
Risk Matrix is a tool used to assess and prioritize risks based on their… #
It categorizes risks into different levels of severity (e.g., low, moderate, high) to guide risk treatment decisions and control measures.
Risk Appetite Statement is a formal document that defines the organizatio… #
It outlines the desired level of risk exposure, tolerance thresholds, risk management principles, and decision-making criteria to guide risk-taking behaviors and strategies.
Risk Governance is the framework, processes, and structures that guide an… #
It involves defining risk management roles, responsibilities, accountabilities, and reporting mechanisms to ensure that risks are identified, assessed, managed, and monitored effectively.
Risk Committee is a group of individuals within an organization responsib… #
It typically includes senior executives, board members, risk managers, and subject matter experts who provide strategic direction, oversight, and support for risk management initiatives.
Risk Management Framework is a structured approach to managing risks syst… #
It involves establishing policies, processes, tools, and controls to identify, assess, treat, monitor, and report risks to achieve strategic objectives and enhance organizational resilience.
Risk Assessment Tools are instruments or methodologies used to identify,… #
They can include checklists, surveys, interviews, workshops, scenario planning, and quantitative models to assess risks from different perspectives and dimensions.
Risk Management Software is a technology solution used to automate, strea… #
It can include tools for risk identification, assessment, treatment, monitoring, reporting, and decision-making to enhance risk visibility, transparency, and accountability.
Risk Reporting is the process of communicating risk information, analysis… #
It involves preparing reports, dashboards, presentations, and updates to inform decision-makers, executives, board members, regulators, and employees about the status, trends, and effectiveness of risk management activities.
Risk Culture Assessment is a diagnostic process used to evaluate the orga… #
It involves surveys, interviews, focus groups, and observations to assess the maturity, alignment, and effectiveness of the risk culture and identify opportunities for improvement.
Risk Management Training is a structured program designed to educate and… #
It can include workshops, seminars, e-learning modules, simulations, case studies, and certifications to build risk awareness, competencies, and capabilities at all levels of the organization.
Risk Management Certification is a formal credential awarded to individua… #
It can include certifications such as Certified Risk Manager (CRM), Certified Risk Analyst (CRA), Certified Risk Professional (CRP), or Professional Certificate in Risk Management Psychology to validate expertise and credibility in the field.
Risk Management Challenges are obstacles, barriers, or complexities that… #
They can include issues such as lack of risk awareness, siloed risk management, limited resources, inadequate tools, resistance to change, regulatory compliance, technological advancements, globalization, emerging risks, and stakeholder expectations that require innovative solutions, collaboration, and continuous improvement to enhance risk resilience and competitiveness.
Risk Management Best Practices are proven strategies, methodologies, and… #
They can include principles such as risk-based decision-making, stakeholder engagement, risk ownership, transparency, accountability, continuous monitoring, adaptive learning, and integration of risk management into strategic planning, governance, and operations to enhance resilience, agility, and sustainability in a dynamic and uncertain environment.
Risk Management Trends are emerging developments, innovations, and shifts… #
They can include trends such as digital transformation, artificial intelligence, predictive analytics, cybersecurity, climate change, ESG (Environmental, Social, Governance), supply chain resilience, geopolitical risks, remote work, agile risk management, and regulatory reforms that require organizations to adapt, evolve, and innovate their risk management strategies to address new challenges and opportunities effectively.
Risk Management Resources are tools, templates, guides, frameworks, publi… #
They can include resources such as the World Economic Forum Global Risks Report, COSO ERM Framework, ISO 31000 Standard, GARP (Global Association of Risk Professionals), RIMS (Risk Management Society), PRMIA (Professional Risk Managers' International Association), and IIA (Institute of Internal Auditors) that offer access to research, best practices, networking, training, certifications, and thought leadership in the field of risk management.
Risk Management Case Studies are real #
life examples, stories, and experiences of organizations facing and managing risks successfully or unsuccessfully. They provide valuable lessons, insights, and strategies for understanding, assessing, and mitigating risks in different contexts, industries, and scenarios. They can include case studies such as the Deepwater Horizon oil spill, Enron scandal, Volkswagen emissions scandal, Equifax data breach, COVID-19 pandemic, 2008 financial crisis, Tylenol poisoning crisis, Toyota accelerator pedal recall, BP Texas City refinery explosion, Hurricane Katrina response, Boeing 737 MAX crashes, Target data breach, Wells Fargo fake accounts scandal, Samsung Galaxy Note 7 battery fires, Chernobyl nuclear disaster, Fukushima nuclear meltdown, and other high-profile incidents that highlight the importance of effective risk management, crisis preparedness, ethical leadership, transparency, and accountability in mitigating risks and preserving organizational reputation, trust, and value in a complex and interconnected world.
Risk Management Ethics are principles, values, and standards of conduct t… #
They include integrity, honesty, transparency, fairness, accountability, confidentiality, objectivity, professionalism, respect, and compliance with laws, regulations, and ethical codes of conduct to build trust, credibility, and reputation in managing risks responsibly and ethically. They require risk managers to uphold the highest ethical standards, avoid conflicts of interest, act in the best interests of stakeholders, disclose information accurately, and make decisions that promote the long-term sustainability and well-being of the organization and society as a whole.
Risk Management Leadership is the ability of individuals, executives, and… #
It involves setting risk management objectives, priorities, and expectations, fostering a risk-aware culture, promoting risk transparency, accountability, and ownership, aligning risk management with strategic goals, values, and priorities, empowering employees to take risks responsibly, building resilience, agility, and innovation, and creating a culture of continuous learning, improvement, and ethical decision-making to enhance organizational performance, reputation, and sustainability in a volatile, uncertain, complex, and ambiguous (VUCA) world.
Risk Management Frameworks are structured models, guidelines, and methodo… #
They provide a systematic approach to identifying, assessing, treating, monitoring, and reporting risks in alignment with organizational objectives, strategies, and values. They can include frameworks such as the COSO ERM Framework, ISO 31000 Standard, NIST Cybersecurity Framework, PMI Risk Management Framework, FAIR (Factor Analysis of Information Risk) Standard, ITIL (Information Technology Infrastructure Library) Risk Management, COBIT (Control Objectives for Information and Related Technologies) Risk Management, RIMS Risk Maturity Model, OCEG (Open Compliance & Ethics Group) GRC (Governance, Risk, Compliance) Capability Model, and other industry-specific or sector-specific frameworks that provide guidance, best practices, tools, and resources for organizations to enhance their risk management capabilities and maturity levels to address evolving threats, opportunities, and challenges effectively.
Professional Certificate in Risk Management Psychology is a specialized t… #
It focuses on understanding human behavior, decision-making, motivation, emotions, biases, perceptions, attitudes, and responses to risk, uncertainty, and adversity in organizational, social, economic, environmental, technological, and political contexts. It covers topics such as risk perception, risk communication, risk assessment, risk tolerance, risk culture, risk resilience, risk leadership, risk ethics, risk governance, risk psychology, behavioral finance, cognitive psychology, social psychology, organizational psychology, crisis psychology, resilience psychology, and other interdisciplinary areas to enhance risk management capabilities, effectiveness, and sustainability in a complex, dynamic, and interconnected world where human factors play a critical role in shaping risk outcomes, responses, and consequences that impact organizations, communities, and societies.