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As applied to finance, risk management concerns the techniques and practices for measuring, monitoring and controlling the market-and credit risk (and operational risk) on a firm's balance sheet, due to a bank's credit and trading exposure, or re a fund manager's portfolio value; for an overview see Finance § Risk management.
Financial risk management is the practice of protecting economic value in a firm by managing exposure to financial risk - principally credit risk and market risk, with more specific variants as listed aside - as well as some aspects of operational risk.
The process to manage operational risk is known as operational risk management. The definition of operational risk, adopted by the European Solvency II Directive for insurers, is a variation adopted from the Basel II regulations for banks: "The risk of a change in value caused by the fact that actual losses, incurred for inadequate or failed ...
Deliberate risk management is used at routine periods through the implementation of a project or process. Examples include quality assurance, on-the-job training, safety briefs, performance reviews, and safety checks. Time Critical Time critical risk management is used during operational exercises or execution of tasks.
Financial GRC relates to the activities that are intended to ensure the correct operation of all financial processes, as well as compliance with any finance-related mandates. Operational GRC relates to all operational activities such as property safety, product safety, food safety, workplace health and safety, IT compliance asset maintenance, etc.
ISO 31000 is a set of international standards for risk management.It was developed in November 2009 by International Organization for Standardization. [1] The goal of these standards is to provide a consistent vocabulary and methodology for assessing and managing risk, resolving the historic ambiguities and differences in the ways risk are described.
ALM sits between risk management and strategic planning. It is focused on a long-term perspective rather than mitigating immediate risks; see, here, treasury management . The exact roles and perimeter around ALM can however vary significantly from one bank (or other financial institution ) to another depending on the business model adopted and ...
The understanding of risk, the methods of assessment and management, the descriptions of risk and even the definitions of risk differ in different practice areas (business, economics, environment, finance, information technology, health, insurance, safety, security etc). This article provides links to more detailed articles on these areas.