About This Course
The introduction to risk management course provides the fundamentals to the management of risk, focussing on definitions and comprehension of risk, corporate governance and control, a framework to manage risk across the enterprise and operational risk. The course is exciting, merging theory and practical application. The course provides the foundation of knowledge, the principles of risk management, on which further studies such as investment management, banking risks and derivative instruments are built upon.
Since people are by nature risk averse, they have always found ways to manage risks. Entrepreneurs and shareholders accept the risk associated with a certain type of business to earn the reward associated with that particular type of business or industry. For example, a person investing in the construction industry will be aware that this industry is subjected to cyclical swings in demand, but that the return is generally higher than that of stable industries such as electricity supply or food.
Peter F Drucker observed that risk management may be as important as entrepreneurship and business acumen in propelling the economic growth of the Western world. He argues that society’s ability to manage unexpected events is probably one of the characteristics that most distinguishes the developed from the developing nations. Unexpected events happen to rich and poor nations but a society that is able to control and cushion against such events is better able to deploy its resources towards economic and social advancements.
Businesses are more aware of risk today. Many big companies in South Africa now have risk management departments. The reasons for this might be linked to the corporate objectives of survival, growth and maximising shareowner wealth. Also, risk and return are interrelated. Any reduction in the risk profile of an organisation following a deliberate risk management programme will result in a more efficient risk-return trade-off. Therefore, adopting a risk management programme is of itself consistent with the general reasons for the existence of a firm (Valsamakis et al., 2005).
