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More About This Title Smart Risk Management: A Guide To Identifying andCalibrating Business Risks
English
Management accountants must be able to define the payoffs from their organisation's risk taking, as well as identify, understand, and reduce the negative effects of everyday business risks. This book defines organisational risk taking and outlines a formal process to handle risk effectively.
The book details six steps for sound risk management:
- Defining risk
- Examining your attitude toward risk
- Analysing your organisation's ability to handle risk
- Minimising a risk's exposure or downside
- Recovering quickly from a risk's negative impacts
- Expanding your knowledge so you can accept more risk with confidence
Written for management accountants, Smart Risk Management analyses your position in the middle of the organisation-ensuring both that it does not take risks whose costs it cannot afford and that it takes enough risks to stay competitive in the evolving marketplace.
Having adequate insurance coverage is only one small piece of risk management, as this book explains. With ample examples and case studies, as well as 50 hands-on risk tools, Smart Risk Management will enhance your understanding of strategic, operational, and innovation risk and increase your value to your organisation.
English
Ron Rael, CPA, CGMA, is a thought leader for the CPA profession on leadership and CFO/Controllership topics. He is the CEO of the High Road Institute, a leadership development organization. Ron has authored content on topics such as professionalism, customer service, budgeting, accountability, governance, risk management, and strategic planning. He has coached more than 10,000 accounting professionals in organizations and leadership teams throughout the United States and Canada.
Ron’s industry experience comes from working in two large corporations, as well as from leading accounting teams in numerous closely held businesses.
English
The Ultimate Risk Taker xiii
Exercise: What Is Your Risk IQ? xiv
Chapter 1 What Risk Management Is and Is Not 1
Getting Into the Risk Mentality 1
Exercise: Your Risk 1
No Insurance Selling Allowed 1
Risk Is Something CFOs Often Ignore 2
Anything Can Go Wrong 2
Process for Implementing an Eective Risk Management Program 2
Afford the Cost 2
Analysis of Google’s Risk 3
Relationship of Risk and Risk Taking 4
Innovation and Risk Management 4
Update the Culture 5
Understanding the Innovative and Risk-Taking Organisation 5
Survival Creates Infinite Sources of Risk 6
Summary: Risk Is Ordinary and Expected 6
Chapter 2 The Two Views of Risk 7
Duality of Risk 7
The 34,000 -Foot View 7
Exercise: Questions to Gauge Your Risk Tolerance 8
The 100-Yard View 8
Objective Versus Subjective Risk 9
Personal Risk Spectrum Tool 9
This Spectrum in My Life 11
Individual Risk Taking 11
Summary: Everyone Sees Risk Di erently 12
Chapter 3 Your Firm’s Risk Management Plan 13
Five Stages of Crisis Management 13
Your Risk Management Program 13
Fraud and Risk Management 14
Risk Awareness Prevents Fraud 14
Profits and Risk Management 15
Risk of Financial Loss 15
On-Spot Information Gives Rise to Profit Potential 15
The Risk Champion and Risk Team 16
Your Business Plan Risk 16
Strategic Risk 17
Operational Risk 18
Innovation Risk 19
Practical Solutions for Managing Business Model Risk 20
10½ Rules for Successful Business Risk Taking 20
Summary: Risk Requires a Proactive Plan 21
Chapter 4 Step One—Define Risk 23
Exercise: Defining Risk 23
Taking the First Step 24
What You Will Discover in Step 1 24
Why Defining Risk Is Necessary 25
Practical Solutions for Making People Aware That Risk Exists 25
Case Study Analysis of a Bank’s Evolving Risk Appetite 25
Insurance’s Inadequacy in Risk Management 26
Uninsurable E-Commerce Risk 26
Uninsurable Risk of Doing Business Across the Globe 27
Fostering Risk Awareness Case Studies 27
Analysis of a Financial Company’s Lack of Risk Awareness 27
Risk Awareness Tool 28
Summary: Importance of Step 1 29
Chapter 5 Step Two—Examine Attitudes Toward Risks 31
Exercise: Determine Your Risk Tolerance 31
The Second Step 32
Personal Risks 33
The Uncertainty Domino 33
Motivation Behind Avoiding Risk 34
Lesson of Step 2 34
Your Firm’s Specific Definition of Risk 34
Exercise: Taking a Risk 35
The Mind-Set of the Risk Taking Entrepreneur 36
The Mind-Set of the Risk Averse Person36
Back to Us 36
Case Study 36
Analysis of Royal Bank of Canada Revisited Risk Definition 36
A 10½ Step Plan to Build Your Self-Confidence for Risking 37
10½ Rules of Creative Risk Taking 37
Exercise: Who Is Running the Train? 38
Summary: Importance of Step 2 39
Chapter 6 Step Three—Analyse the Firm’s Ability to Handle Risk 41
Case Study 41
Analysis of Amazon’s Ability to Take Risks 41
Case Studies to Learn From 42
Exercise: Risk Analysis 42
Risk of Weak Accountability 44
Exercise: Accountability Self-Assessment 44
The Source of All Business Risks 46
Risk’s Two Faces 48
Accounting Sits in the Middle 49
The Cultural Aspect of Risk Taking and Risk Management 49
Your Culture Mosaic 50
Visible Clues About Risk in Your Culture’s Norms 50
Morale Is Vital in Risk Awareness 51
Culture Must Never Be Downplayed 51
Case Study 52
Analysis of Culture and Risk 52
Risk Analysis Tools 52
Tools of Risk Identification 52
Tool for Breaking Down a Risk Into Manageable Actions 54
Exercise: What Would You Need? 55
Exercise: Givens, Negotiables, and Controllables 55
In Essence 56
A Culture That Balances Risk Taking and Risk Exposure 56
The Point 57
How to Generate a Balanced Risk Taking Culture 57
Culture’s Impact on Risk Taking 57
Risk Inherent in Your Culture 58
Walk in My Shoes 58
Summary: Importance of Step 3 59
Chapter 7 Step Four—Minimise the Risk Exposure 61
Risk Mitigation Tools 61
Exercise: Risk Strategy Grid 61
Proactive Attitudes 63
Importance of Step 4 64
Balanced Risk Taking Requires Employees Thinking for Themselves 65
Tool to Perform an Authority and Responsibility Analysis 66
Tool to Analyse the Causes of Exposure 68
The Real Risk 70
Exercise: Finding the Root Cause 71
Tool for Isolating the Optimal Solutions 71
Summary: Importance of Step 4 73
Chapter 8 Step Five—Recover From the Negative Results 75
Risk Recovery Tools 76
Tool for Pitfall Planning 76
Exercise: Risk Analysis 77
Contingency Funds in Risk Management 77
Tool for Fostering a Lessons Learned Attitude 78
Exercise: Lessons Learned 78
The Risk Audit 78
Tool for Continuous Learning 80
Case Study 81
Analysis of Mega-Retailer’s Growing Risk 81
CEO Lessons Learned 81
Summary: The Importance of Step 5 82
Chapter 9 Step Five½—Commit to Taking Action 83
The (Never Completed) Last Step 83
Action Plan: Tool for Planning for Risks 84
Tool for Action Plan Reporting and Accountability 86
Summary: The Importance of Step 5½ 88
Chapter 10 Risk Management and the Management Accountant 89
The Demand for Our Risk Awareness 89
Inherent Risk 89
Control Risk 90
Assertion 90
Detection Risk 90
Risk and Path of Least Resistance 90
Where Auditors Need to Look 91
Ways to Alter Employee’s Path of Least Resistance 92
Chapter 11 The Wide World of Risks 93
Risk in Weather 93
Risk in Geopolitics 93
Risk From People Resources 94
Risk From Fraud and Employee Abuses 94
Warning Signs of Situations at Risk for Unethical Behaviours 95
Risk in Your Static Rewards 95
Risk in Employment Compliance 96
Risk in the Technology Dependent Age 96
Risk in Information Security 96
E-Commerce Risk 97
Risk of Sabotage 97
Risk to Personal Data 99
Risk in E-Mail 99
Risk in Internet Privacy 99
Risk of Internet Rumours 100
Summary: The Importance of These Risks 101
Appendix A Tool for Culture Risk Assessment 103
Pressure Point No1: The Growth Factor 103
Pressure Point No2: The Corporate Culture 103
Pressure Point No3: The Management of Information 103
Appendix B Ethics Focus: Business and Industry 105
Ethics Overview 105
Key Ethical Dilemmas 105
Glossary of Controllership and Financial Management Terms 107
