*Dr.R.Radhika Hyderabad business School GITAM University radhika@gitam.in *Harshavardhan.L I.I.M. calcutta tuneharsha@gmail.

com

Risk: Potential for exposure to loss which can be determined by using either qualitative or quantitative measures Risk Assessment: Process of identifying the risks to an organization, assessing the critical functions necessary for an organization to continue business operations, defining the controls in place to reduce organization exposure and evaluating the cost for such controls. Risk analysis often involves an evaluation of the probabilities of a particular event.

Risk Management: Culture, processes and structures that are put in place to effectively manage potential negative events. As it is not possible or desirable to eliminate all risk, the objective is to reduce risks to an acceptable level.

What can go wrong? What is the chance of occurrence? Why? What are the consequences? What are the alternatives? What are the tradeoffs among alternatives? How will these alternatives affect future decisions?

Multiple paths to failure, which refers to the number of ways a risk event can occur Detect ability, which refers to how effectively the occurrence of risk events can be detected Controllability, which refers to how much the risk event can be controlled after it has been detected

Event-Tree Analysis (ETA) an inductive reliability analysis tool resulting in a graphical representation of precedence relationships among initiating and succeeding events. ETA graphical representations resemble, and may be referred to as, event sequence diagrams, master logic diagrams, and reliability block diagrams.

Stress Testing a process to test the stability of various financial institutions beyond their normal operating capacity and environment in order to observe results and identify potential failure scenarios. Dynamic Financial Analysis (DFA) an approach which looks at the dependencies among hazards in a financial system using various simulation and economic analysis tools rather than simple traditional actuarial analysis.

Petri Net Modeling for Complex Analysis a mathematical and graphical language used to represent distributed systems and their states as nodes and the changes in those states as directed arrows. Visual Risk Cluster the visual representation and analysis of hierarchical risks, with categories and subcategories.

Committee of Sponsoring Organizations (COSO) of the Tread way Commission Enterprise Risk Management Framework a matrix structure of four organizational objectives categories (strategic operations, reporting, and compliance) and eight enterprise risk management components that can be analyzed at either the organizational or business unit level.

In the arena of modified financial tools, one example is risk-based return on investment (RROI), which measures how effectively the use of resources translates into risk reduction or avoidance. As described in 2004 by a team at Lawrence Berkeley National Laboratory and Carnegie Mellon University, RROI is calculated as the ratio between the net benefit of implementing a risk mitigation solution and the implementation cost of that solution and can be succinctly expressed as: RROI = (baseline implementation cost risk residual risk)

Today, more than ever before, there are significant opportunities for organizations to customize and leverage existing and emerging tools to optimize enterprise-wide risk management. Research, education, and outreach from universities, governments, and industry/professional organizations related to next generation tools and techniques provide opportunities for synergistic collaboration that supports organizational risk managers.