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International Association of Risk and Compliance Professionals
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About Risk                                                                         The Role of the Risk Officer                                               
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Welcome to the Portal for the Risk Officer
 
First of all, thank you for visiting our pages. We hope that you'll find a lot of useful information. 
 
According to the National Institute of Standards and Technology, risk is a function of the likelihood of a given threat-source’s exercising a particular potential
vulnerability, and the resulting impact of that adverse event on the organization.
 
For risk managers, all the above words painted in blue have such a different definition and importance.
 
According to the United States Government Accountability Office (GAO), while, in some instances, the public and private sector should apply risk management principles in similar ways, in other instances, the public and private sectors manage risk differently.
 
In both the public and private sectors the risk management process should include:
 
1. The systematic identification and assessment of risks through scientific efforts;
 
2. Efforts to mitigate risks; and
 
3. Risk adaptation to address financial consequences or to allow for effective transfer of risk.
 
The private sector manages risk by “pre-funding” and diversifying risk through insurance. In addition, the private sector creates incentives for individuals to lower the risks they face from, for example, a car accident or a natural disaster, by offering to reduce insurance premiums if the policy holder takes certain steps to mitigate these risks.
 
Similarly, the public sector plays a unique role in managing risk, for instance, regulating land use and establishing building codes; organizing disaster protection, response, and recovery measures; setting regulatory frameworks; and supplementing the insurance industry.

In addition, the private sector organizations have more flexibility than the public sector to select which risks to manage. For instance, the private sector could avoid risks in cases where the costs of ensuring these risks are too high.
 
The private sector tends to naturally consider opportunity analysis—or the process of identifying and exploring situations to better position an organization to realize desirable objectives—as an important part of risk management.
 
In contrast, participants observed, public sector organizations have less flexibility to select which risks to address through protective measures. Like the private sector, the government has to makes choices about which risks to protect against—since it cannot protect the nation against all hazards.
 
Unlike the private sector, the government has a wide responsibility for preparing for, responding to, and recovering from all acts of terrorism and natural or manmade disasters and is accountable to the public for the investment decisions it makes.
 
In the private sector, after the Sarbanes Oxley Act in the USA, the Basel ii/iii Accords in more than 100 countries and the Turnbull guidance in the United Kingdom, the risk officers have become way more important.
 
A company's system of internal control has a key role in the management of risks that are significant to the fulfilment of its business objectives.
 
A sound system of internal control contributes to
safeguarding the shareholders' investment and the company's assets.

Internal control facilitates the
effectiveness and efficiency of operations, helps ensure the reliability of internal and external reporting and assists compliance with laws and regulations.

Effective financial controls, including the maintenance of proper accounting records, are an important element of internal control. They help ensure that the company is not unnecessarily exposed to avoidable financial risks and that financial information used within the business and for publication is reliable.
 
They also contribute to the
safeguarding of assets, including the prevention and detection of fraud.

A company's objectives, its internal organisation and the environment in which it operates are continually evolving and, as a result, the risks it faces are continually changing.
 
A sound system of internal control therefore depends on a thorough and regular evaluation of the nature and extent of the risks to which the company is exposed.
 
Since profits are, in part, the reward for successful risk-taking in business, the purpose of internal control is to help manage and control risk appropriately rather than to eliminate it.
 
All employees have some responsibility for internal control as part of their accountability for achieving objectives.
 
They, collectively, should have the necessary knowledge, skills, information, and authority to establish, operate and monitor the system of internal control.
 
This will require an understanding of the company, its objectives, the industries and markets in which it operates, and the risks it faces.
 
The risk officers must coordinate this effort. Good risk officers make a real difference in any organization. 
 
Governments also need good risk management. According to the GAO, improving risk communication, political obstacles to risk-based resource allocation, and a lack of strategic thinking about managing homeland security risks.
 
Improving risk communication posed the single greatest challenge to using risk management principles. To address this challenge:
 
1. We must educate the public and policymakers about the risks we face and the value of using risk management to establish priorities and allocate resources
 
2. We must engage in a national discussion to reach a public consensus on an acceptable level of risk
 
3. We must develop new communication practices and systems to alert the public during an emergency.
 
In addition, to address strategic thinking challenges, governments must  develop a national strategic planning process for security and government wide risk management guidance.
 
To improve public-private sector coordination, the private sector should be more involved in the public sector’s efforts to assess risks and that more state and local practitioners and experts be involved through intergovernmental partnerships.
 

 
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