Talking Risk

In other words, we can’t change the impact or reduce the likelihood. Therefore, we accept a moderate risk score and monitor the market movements.

The Bank has no control over how the interest rates move. What can be done is to monitor the markets and make adjustments, where possible, to minimize potential losses from adverse interest rate changes.

So based on that assessment, the current risk score is 9 which is considered to be Moderate.

No, I am referring to the income that the Bank earns on the investments. Given how the markets are so unpredictable, that is likely to happen.(3)

And you are saying that’s a good thing?

Exactly; and in that scenario, a moderate risk score is acceptable.

I hear what you saying about the Bank, but what about my pension?

Your pension is secure. One of the underlying principles of the Bank’s investment strategy is the preservation of capital. This means, even if there is a loss of income due to market movements, the principal, including your pension, is preserved.

Not all risks targets can be low. The Bank takes appropriate risks. A culture of aggressive risk avoidance could potentially stifle progress then the Bank won’t be able to achieve its overall objectives.

Ok, I could work with that. So you’re saying that not every time the risk has to be low?

But how to decide when a risk target should be low or moderate?

For real – juggling breaking dawn, music fest, white sands plus the assignment, I getting tired just thinking about it.

This

risk

Here’s a risk response for you … pick up your assignment, run with it , finish it like a boss and then you could walk like a champion .

management thing seems like a full-time job in itself.

You have to consider:

1. How critical is the process that is being assessed? 2. What would be the overall impact of the risk? 3. How much can be done to reduce the likelihood? 4. What corrective action can be taken if the risk materializes?