Risk Management Strategies 2019 - SAIPA

Risk Management Strategies 2019

Risk Management Strategies

CPD - COMMERCE & INDUSTRY

2019

RISK MANAGMENT STRATEGIES 2

Risk Management


▪ Risk management enables an organisation to evaluate all relevant

business and regulatory risks and controls and monitor mitigation

actions in a structured manner

▪ With the recent increase in regulatory mandates and increasingly

activist shareholders, many organisations have become sensitized to

identifying and managing areas of risk in their business: whether it is

financial, operational, IT, brand or reputation related risk.

▪ These risks are no longer considered the sole responsibility of

specialists - executives and the boards demand visibility into exposure

and status so they can effectively manage the organisation’s long-term

strategies.

▪ As a result, companies are looking to systemically identify, measure,

prioritise and respond to all types of risk in the business, and then

manage any exposure accordingly.

Risk Management


Types of Risks


Types of Risks


Business Risks


Strategic Risks


Governance Risk


Compliance Risk


Compliance risk is the risk of legal or

regulatory requirements, material

financial loss, or loss to reputation a

business may suffer as a result of its

failure to comply with laws,

regulations, rules, related self-

regulatory organisation standards,

and codes of conduct applicable to

its business activities.

Compliance Risk


Compliance Risk


Financial Risks


Financial Risks


Financial Risks


Financial Risks


Interest Rate Risk

▪ The amount at risk is the function of

the magnitude and direction of

interest rate changes and the size

and maturity structure of the

mismatch position

▪ If interest rate rise, the cost of funds

increases more rapidly than the yield

on assets, thereby reducing net profit

▪ If the exposure is not managed

properly it can erode both the

profitability and shareholders value

Financial Risks


Financial Risks


Financial Risks


Financial Risks


Operational Risks


Operating Risks


Operating Risks


Cyber Risks


Cyber Risks


Cyber Security


Cyber Risks


Cyber Risks


Cyber Risks


International Business Risk


Risk Management Framework


Risk Management Framework


Risk Management - Concept


Enterprise Risk Management






GRC – Implementation Risks


GRC – Implementation Strategy
































SME Risk Management


SME Risk Management


Fraud - Triangle


Fraud - Triangle


Fraud – Ethical Risk


Financial Statement Fraud


▪ Financial statement fraud, involves the intentional mis-statement

or omission of material information from the organisation’s

financial reports - these are cases of “cooking the books or

figures”.

▪ Financial statement fraud cases often involve the reporting of

fictitious revenues or the concealment of expenses or liabilities in

order to make an organisation appear more profitable than it

really is.









Effects of Financial Statement Fraud

▪ Undermines the reliability, quality,

transparency and integrity of the

financial reporting process

▪ Jeopardises the integrity and

objectivity of the accountancy

profession

▪ Diminishes the confidence of the

capital markets as well as market

participants in the reliability of

financial information

▪ Makes capital market less effect



Costs of Financial Statement Fraud

▪ Adversely affects the nation’s

economic growth and prosperity

▪ Results in large litigation costs to the

organisation

▪ Destroys careers of the individuals

involved

▪ Causes bankruptcy or substantial

economic losses to the organisation



Reducing Financial Statement Fraud

▪ Promote strong values throughout the

organisation

▪ Clearly define prohibited behaviour

▪ Provide regular training to all employees

communicating prohibited behaviour

▪ Have confidential advice and reporting

mechanisms (whistle blowing)

▪ Communicate that integrity takes priority

over gaols

▪ Ensure management practice what it

preaches

▪ The consequences of violating the rules

and punishment to violators should be

clearly communicated



Reducing Financial Statement Fraud

▪ Maintain accurate and complete internal

accounting records

▪ Carefully monitor business transactions

and interpersonal relationships between

the financial units

▪ Establish physical security systems to

secure company assets

▪ Divide important functions among

employees

▪ Encourage strong supervisory and

leadership relationships to enforce

accounting procedures

▪ Establish clear and uniform accounting

procedures with no exception clauses


Risk Management Strategies 2019 - SAIPA

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