Determine the organisation’s approach to risk

Overview & Purpose

What This Standard Covers

This Standard outlines the governing body’s responsibilities in risk management, focusing on how to assess, formulate, and approve the organisation’s approach to risk. It involves understanding the nature of risks and establishing a clear risk management strategy.

Performance Criteria

• Determine the governing body’s strategic responsibility for risk taking
• Formulate the organisation’s attitude and policy to risk
• Identify key risks the organisation may face
• Agree on the organisation’s risk appetite and tolerance
• Articulate acceptable and unacceptable types of key risks
• Evaluate risks for potential positive and negative impacts
• Establish overall risk exposure for the organisation
• Identify scoring systems for effective risk measurement linked to strategy
• Define exposure to key risks and changes due to strategy and operating conditions
• Determine the organisation's ability to mitigate key risk impacts
• Understand interactions between different risks

Knowledge & Understanding Requirements

• Concepts of risk, risk appetite, risk tolerance, and capacity
• Nature and extent of risks facing the organisation
• Relationship between risk strategy and the operating environment
• Assessment of extent, categories, and likelihood of risks
• Organisation’s risk management capability
• Principles of risk management including identification, analysis, and mitigation
• Governing body’s strategic risk responsibilities
• Current regulatory frameworks related to risk
• Operations of risk management in relation to internal controls
• Different approaches to risk management
• Impact of risks on key performance drivers and control indicators
• Assessment of risk data accuracy presented to the governing body
• Integration of risk tolerance within the organisational culture
• Availability of resources and systems for effective risk management

Relevent Roles

• Managers and Senior Officials
• Directors and Chief Executives
• Senior Officials of Special Interest Organisations
• Finance Managers and Chartered Secretaries
• Personnel and Industrial Relations Managers
• Chartered and Certified Accountants
• Management Accountants
• Company Secretaries