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BM II 3.01
Risk Management
| Term | Definition |
|---|---|
| Acceptance | A risk-response strategy that involves accepting a risk's consequences because the potential payoff is higher than the losses; also known as risk retention or assumption. |
| Audit report | A document that describes the accuracy and appropriateness of a business's information, processes, or systems. |
| Avoidance | A risk-response strategy that involves choosing not to do something considered risky. |
| Brand erosion | The deterioration or destruction of a corporate or product brand. |
| Chief risk officer (CRO) | An executive responsible for a business's risk-management activities, which include the planning, controlling, preventing, and limiting of business losses and enhancing possibilities for gain. |
| Contingency plan | Specific guidelines and actvities used when responding to undesirable circumstances; an alternative course of action. |
| Credit downgrade | The reduction of a business's credit rating or measure of relative credit risk; usually accompanied by an increase in expenses and a decrease in credit/worthiness. |
| Enviromental scan | A three-step process in which businesses gather information on their surroundings, analyze that information, and determine its future impact. |
| Exchange rate | The price or value at which one currency can be converted to another. |
| Fallback plan | Guidelines explaining what to do and how to recover if a contingency plan fails. |
| Financial risks | Possible events and situations that directly impact a company's cash flow. |
| Hazard risks | Potential events and situations that can cause injury or harm to people, property, or the enviroment. |
| Impact | The effect or influence of an event. |
| Incident log | A record of accidents, injuries, and other mishaps occuring at a particular business or in a certain department |
| Mitigation | A risk-response strategy that involves reducing or controlling the impact of a risk if it occurs. |
| Operational risks | Possible events or situations that are the result of employee actions, core processes, and daily business activities. |
| Proactive | Adapting to the enviroment in advance of the occurrence of events; taking advantage of opportunities rather than reacting to problems |
| Probability | The likelihood an event will occur. |
| Prospective risks | Risks that have not happened before but could occur in the future. |
| Pure risk | A risk that carries the possibility of loss or no loss. |
| Reactive | Hesitant to take action; passive; waiting for changes to occur before acting |
| Retroactive risks | Risks that have previously occurred. |
| Risk | The possibility of loss (failure) or gain (success). |
| Risk-averse | Avoiding risk whenever possible. |
| Risk checklist | A standardized list of risks that a business faces on a regular basis; used to speed up the risk-identification process. |
| Risk identification | A risk-management process that involves recognizing risks that could impact a business's objectives and activities. |
| Risk impact/probability chart | A framework used to determine the severity of risks if they occur; used by risk managers to prioritize risks. |
| Risk management | A business activity that involves planning, controlling, preventing, and limiting of business losses and enhancing possibilities for gain. |
| Risk measurement | A risk-management process that involves determining the potential severity of different risks |
| Risk monitoring and control | A risk-management process that involves determining the effectiveness of current risk-response strategies and tools, tracking exsisting risks, monitoring new risks, and developing responses and workarounds for previously unidentified risks. |
| Risk register | A record or listing of risks that could potentially impact a business or project. |
| Risk response | A risk-management process that involves selecting the most effective ways to handle different risks. |
| Risk-seeking | Looking for ways to turn risk into a strategic advantage or capital. |
| Risk-tolerant | Accepting risk when necessary, but not seeking risk. |
| Speculative risk | A risk that may result in loss, no change, or gain. |
| Strategic risks | Possible events and situations that can affect the execution of an organization's long-term plans. |
| Transference | A risk-response strategy that involves moving the impact of a risk to someone or something else. |
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