RISK MANAGEMENT GROUP 2

RISK MANAGEMENT GROUP ANNU SHARMA DEVASHRITA GUJRAL KHUSHI SAND PRITHA KOHLI TOSHIKA BANSAL 46 15 38 23 04 INDEX S.NO 10 11 12 13 TITLE Introduction Risk Categories Roles & Responsibilities Probability & Risk Matrix Risk Management & Assessment Risk Appetite Risk Reporting Format Risk Consequence Risk Likelihood Risk Treatment Risk Treatment Options Strategic Risk Assessment & Reporting Appendices Pritha Kohli Pritha Kohli Khushi Sand Khushi Sand Devashrita Gujral Toshika Bansal Toshika Bansal Annu Sharma Annu Sharma Annu Sharma Annu Sharma Annu Sharma Annu Sharma INTRODUCTION NARSEE MONJEE COLLEGE OF COMMERCE AND ECONOMICS Narsee Monjee College of Commerce and Economics (also known as NM College) is an affiliated and constituent college of the University of Mumbai It is a highly reputed college for commerce and management education in India The college was established in 1964 by Shri Vile Parle Kelavani Mandal It was awarded a re-accreditation 'A' grade and 3.42 GPA in the first cycle assessment conducted by the National Assessment and Accreditation Council The college follows the curriculum laid down by the University of Mumbai The institute focuses on the overall development of the students The college regularly organizes industrial visits to help the students to get a practical insight into the functioning of an organization The college faculty and students have also undertaken and published multiple research project that is either self-funded or partly funded by the university, non-profit organizations, third party research survey firm, etc The college has also applied for 'Autonomy' with the University Grants Commission Under this scheme the college will formulate and enroll its syllabus on par with the curriculum of national commercial bodies like ICAI, Institute of Actuarial Sciences of India, ICSI and in line with the latest rules and provisions required by the government and corporate entities Courses offered The institute offers courses of study in various commercial disciplines:             Higher Secondary Certificate – Commerce Higher Secondary Certificate – Vocational Bachelor of Management Studies Bachelor of Commerce - Regular Bachelor of Commerce - Honors Bachelor of Commerce (Financial Markets) Bachelor of Commerce (Accounting & Finance) Bachelor of Science (Information Technology) Master of Commerce Advanced Accounting Banking and Finance Doctor of Philosophy RISK CATEGORIES Risks are a part of almost every human activity, and the exceptions are rare and hard to come by It is, however, a fact that the sheltered existence of academia in its Ivory Tower has blinded it to many of the aspects of the world outside that tower, risks being one of them Academia typically behaves as if the traditional way of (work) life were guaranteed forever The reality, however, is that academia could not be more in error than in this case Different types of risk categories are as follows:  Academic risks: Academic risks are those associated with the institution academic’s activity They are mainly research risks and teaching risks a) Research risks Low quality research: research which is all too often rejected by the scientific community, or produces no meaningful results or no results at all Wasteful research: a research project that expends monies and other resources far beyond its budget Research which is harmful to the environment Dangerous research: research that puts people, equipment, animals, buildings or other property at (physical) risk b) Teaching risks Poor teachers: teachers who are unable to teach, or teachers who teach outdated, irrelevant or erroneous material Insufficient teaching resources: lack of teachers (resulting, frequently, in overloaded teaching staff that, in turn, produce bad teaching), lack of teaching assistants or insufficient availability of required teaching materials like books and journals in the library Unfair or improper tests: tests that not measure what they are supposed to test, or tests that are regularly judged to be extremely hard for the students (in a given course or in a whole program) Students who never complete their studies: these students present the institution with a variety of risks, but the academic risk is that, given their status, the institution may be tempted to expedite their graduation at the expense of academic standards or norm c) Quality risks Quality is a major issue for institutions of higher education A serious harm to the quality of the institution is something all the institution’s stakeholders try to avoid Quality risks may be the result of other improperly managed risks or may arise independently Consequential quality risks are usually the result of faculty and student risks, although it may be argued that almost every other risk may affect the quality of the institution Non-consequential, ‘independent’ quality risks include: Lower grades on an external quality evaluation of the institution, compared with its previous review Improved grades on an external quality evaluation of the institution, compared with its previous review - but the improvement is lower than that of the other institutions over a comparable period Decline in perceived quality, as expressed in a significant down-shift of the institution’s ranking in a major ranking system  Faculty-related risks These risks are divided between the institution and individual faculty members Those of the faculty members are not, strictly speaking, the concern of the institution (although they have a direct impact on the faculty members’ behavior, thus, affecting the institution) Wrong promotion to tenure: giving tenure and promotions to undeserving faculty, thus keeping them in the institution even though they not belong in it Wrong non-tenure decision: not giving tenure and promotions to well qualified, deserving faculty, thus causing them to leave or to under-perform  Ethical risks Unethical research practices: ignoring safety rules, ignoring known regulations and practices - when it comes to research involving humans, misuse of research funds, untrue reporting of results, achievements, or discoveries Plagiarism: using the work of others without giving them the proper credit Unethical exploitation of students: for private purposes, unauthorized experiments, or assistance in teaching Unethical grading: allowing improper influences to dictate the grades given to students This risk may be the result of external influences (like donors, parents or management) or it may be the result of personal biases or preferences, unrelated to the student’s performance in the course  Political risks These mainly involve a (dramatic) shift in policies governing higher educationand, subsequently, a major revision in funding policies Political platforms varyconsiderably among the various parties, and their attitudes regarding higher education - its funding, management, size, and freedom - affect higher education institutions considerably  Management risks Under this heading comes a slew of risks associated with management in organization In addition to these, higher education has a different management structure than most other organizations, and thus has an added collection of risks, including: Replacement of successful managers because of required rotation This is shown, in the most vivid fashion, by the common practice of rotating rectors, deans and department heads every few years - just when they have become comfortable with their job function A two-heads approach to management: in some institutions the rector is responsible for academic affairs while the general manager is responsible for the institution’s administration, without a well-defined ‘tie-breaking’ rule in case of conflicts  Leadership risks The absence of good leadership is a risk for all organizations, and institutions of higher education are no exception It is probably even greater for these institutions due to the very long planning and working schedules that are commonplace in them, as opposed to those adopted by commercial enterprises These long processes make changing the direction of an institution a slow and tedious process, thus increasing the long-term effects generated by the misdeeds of a mediocre leader  Students-related risks Declining entry grades: these will, over time, degrade the students’ performance achievements in any comparison-based activity, as well as in the job market The resulting decline in the institution’s reputation may be hard to reverse and it will probably lead to even lower entrance grades in the next incoming class Pressure for higher grades, easier exams: this is a constant, on-going struggle between students and teachers Giving in is the easiest way out for an individual teacher, particularly when the teacher is one of a group teaching the same course and the grades given by that teacher are systematically lower than those given by the teacher’s peers When an inflation of grades ensues, the results are a loss of reputation and decreased possibilities for the students to be admitted to graduate degrees based on those grades if they are undergraduates For graduate students, similar consequences may be present when they apply for jobs or post-doctoral positions Poor placement: as is well known many students attending institutions of higher education so because they feel and know that an academic degree is either a prerequisite for employment or, at least, a very serious advantage That is true for both bachelor and graduate degree candidates They therefore assess the institutions based on their success in placing their students in desirable positions Failure in the placement of students can seriously influence the attractiveness of the institution for the next generation of students - with all that that entails  Financial risks Insufficient funds for research, teaching, maintenance, and development: while all institutions want more money for their activities, the unavailability of sufficient funds to support what the institution believes is the minimum necessary for its sustainable operation presents a grave risk to that institution This risk becomes aggravated if the shortage of funds continues over a long period In that case, either the institution must adjust its size, activities, and aspirations to its financial capabilities - or it may go into bankruptcy Bankruptcy: this may mean shutting down the institution or, in the best case, reorganizing it in a totally different fashion with all the consequences of such reorganization  Insufficient (non-financial) resources Clearly, the absence of sufficient resources slows down or even prevents many attempts to enable the institution to grow and develop, even if it has all the other necessary requisites like money and faculty Among those resources, the most important ones are listed below Classrooms: insufficient classrooms result in sub-optimal schedules for teachers, since the dominating constraint becomes the availability of rooms These sub-optimal schedules create dissatisfaction and annoyance and thus unsatisfied stakeholders In addition, it results in opportunity loss (for hosting seminars, conferences and similar activities) and makes any attempt to add a lecture -instead of a cancelled one or as an addition that is deemed necessary - almost impossible, again with negative consequences Laboratories: insufficient laboratories basically create the same phenomena as that of insufficient classes, with the added problem of potentially slowing down research or even preventing it from starting Equipment: any shortage of equipment for teaching or research diminishes the institution’s capability of carrying out its mission  Competition Competition is a risk inherent in almost all human activity While competition produces, many times, better products, and services, it may also cause unchecked behavior that may lead to disastrous results For example, if the competition is over the size of the student body (between institutions or between departments in the same institution), standards may be lowered or ignored- with the result being diminished reputation, uncontrolled and insupportable growth and more These may lead to instability and to rash actions that will not benefit the institution  Violence Violent behavior by students, faculty, or staff - or by outsiders gaining access to the institution’s grounds - carries obvious risks with it  Safety and Security An unsafe institution is shunned by everyone that can The results are clear and unpleasant  Declining reputation Whether resulting from the institution’s actions or from external actions, an institution of higher education is seriously affected by damages to its reputation  Faculty Desertion An unplanned, uncontrolled, reduction in the faculty size and composition may seriously hamper a higher education institution’s activity and reputation Institutions of higher education are, by and large, defined by their faculty Hence, desertion of a significant group of faculty members is a grave risk  Insufficient enrollment - in general or for certain departments This risk affects the income of the institution, its reputation, admission and rejection rates, self-image and more The results may be long lasting and quite unpleasant This list, while non-exhaustive, does present enough evidence that risks are prevalent in all institutions of higher education While some institutions may have more of some types of risks and less of some other types, and other institutions’ list of risks will be different, all share many of the risks in the list However, the lack of a systematic, coherent, and transparent approach to risk management in academia leaves every single management team in an institution of higher education to cope with those risks alone, without the benefits of shared information, shared insights and, even worse, without tested tools for their own needs in risk management ROLES AND RESPONSIBILITY The role of a Risk Manager is to communicate risk policies and processes for an organisation They provide hands-on development of risk models involving market, credit and operational risk, assure controls are operating effectively, and provide research and analytical support Risk Managers must have excellent quantitative and analytical skills, along with the ability to apply those skills across a variety of business processes Risk Management duties and responsibilities of the job The duties under a Risk Management job description include the following:  Designing and implementing an overall risk management process for the organisation, which includes an analysis of the financial impact on the company when risks occur  Performing a risk assessment: Analysing current risks and identifying potential risks that are affecting the company  Performing a risk evaluation: Evaluating the company’s previous handling of risks, and comparing potential risks with criteria set out by the company such as costs and legal requirements  Establishing the level of risk, the company are willing to take  Preparing risk management and insurance budgets  Risk reporting tailored to the relevant audience (Educating the board of directors about the most significant risks to the business; ensuring business heads understand the risks that might affect their departments; ensuring individuals understand their own accountability for individual risks)  Explaining the external risk posed by corporate governance to stakeholders  Creating business continuity plans to limit risks  Implementing health and safety measures, and purchasing insurance  Conducting policy and compliance audits, which will include liaising with internal and external auditors  Maintaining records of insurance policies and claims  Reviewing any new major contracts or internal business proposals  Building risk awareness amongst staff by providing support and training within the company Risk Management job qualifications and requirements A degree in the following subjects is not vital but can be included in a job description:  Risk Management  Management or Business Studies  Finance or Economics  Science  Statistics  Engineering  Law Postgraduate degrees are not mandatory, but may also be beneficial If a candidate does not have a degree, a career in risk management is certainly still possible, but would mean working up the career path, likely starting at an administrative level When compiling a Risk Management job description, it’s important to also display the following skills:  Analytical skills and an eye for detail  Commercial awareness  Numerical skills  Planning and organizational skills  Ability to understand broader business issues  Communication and presentation skills PROBABILITY AND RISK MATRIX A risk matrix that is used during this assessment to define the level of risk by considering the category of probability or likelihood against the category of consequence severity This is a simple mechanism to increase the visibility of risk and assist management decision making RISK APPETITE The risk appetite of different organizations in the sector will vary greatly For example, newly established private training companies may be willing to take significantly more risk than a more established college in order to pursue growth, in the knowledge that there is a higher likelihood that the business may fail to achieve its objectives Risk appetite can also be variable across different areas of a business or over time For example, an established college may be prepared to take more risk in a new curriculum area that they are looking to develop, or may accept greater risks at particular times (for example when undertaking a significant capital project) Risk appetite is assessed in terms of three bands: conservative, balanced or entrepreneurial as follows:    Conservative: unless there is a compelling reason to so, the University should not accept opportunities with risks attached that could result in significant exposure or loss, and should proceed with caution in pursuing these opportunities Balanced: there is some risk associated with the opportunity being pursued, however there are mitigating actions available to help reduce these risks to an acceptable level of exposure Entrepreneurial: there is some higher risk associated with the opportunity being pursued, there are treatments available to mitigate the risk, and the opportunity is worth pursuing / too good to miss RISK REPORTING FORMAT A risk report imparts information about the company’s most pressing risks at the moment Typically it will address critical risks, where consequences for the firm could be dire; as well as emerging risks that could cause larger trouble in the future if they’re not monitored carefully Moreover, the risk report should discuss how well the company is or isn’t managing those risks at that moment So the report might also include material about which policies are insufficient, which controls aren’t working as well as expected, or what additional steps might be necessary to keep risk within the company’s tolerance levels College may report and escalate relevant risks to stakeholders, for example, college council, regional directors, Senior Education Improvement Leaders etc through appropriate channels Consult and update relevant internal and external stakeholders throughout the risk management process Report on risks that are shared with relevant stakeholders to provide assurance that the institute is managing the risk appropriately A risk or hazard register is where you record the information from the risk management process For each identified hazard the following information should be recorded:         description of the hazard the harm the hazard could cause the likelihood the harm would occur the level of risk the effectiveness of current controls what further controls are needed how the controls will be implemented – by whom and by when review date College will produce risk management documentation to support its risk management approach and reporting requirements In addition to the risk policy and strategy, key documents are likely to include:    a risk register or series of risk registers a risk action plan (if not included within the risk register) an annual risk management report As a live document that prompts debate as opposed to reflecting past discussions, the risk register will be intuitively easy to follow and simple to update Regular review will enable its content to be continually changed and updated to effectively reflect the college’s risk management position RISK CONSEQUENCE MATRIX – RISK CONSEQUENCE People (Staff, Students, Volunteers, Contactors) Insignificant Minor - Minor irregular capacity / capability failures or Injuries or ailments not requiring medical treatment - Minor capacity/ capability failures or minor injury or first aid treatment case Moderate - Repetitive failure in business capacity/ capabilities causing some reputational impact or serious injury causing hospitalizatio n or multiple medical treatment cases College Reputation - Expected consequenc e of conducting business Risk Owners review - Minor disruptio ns in business - Executi ve Manage ment Team review - Internal disruption some disaffected students/ staff/ parents – Principal and SVKM Committee review Major Severe - Parts of business fail due to capacity/ capability failures or lifethreatening injury or multiple serious injuries causing hospitalisatio n - Business failure due to capability failures or Death or multiple lifethreatening injuries - Intense public, political and media scrutiny Will significantly impact enrolment base - Will impact organisatio nal viability Board or external party review Board or external party review College Business Operat ions College Financials Educatio nal/ Academic Outcomes - Minor errors in systems or processes requiring corrective action, or minor delay without impact on overall business - Policy procedural rule occasionall y not met or services not fully meet needs - One or more key accountability requirements not met Inconvenient and disruptive but not organizational ly threatening - Strategies not consistent with organization’s agenda Trends show service is degraded - Significan t and repetitive control failures leading to major impact in business operations - Critical system failure, bad advice or ongoing noncompliance -Business severely affected -