The approach we use is roughly as follows:
Residual risk = Gross risk / Risk controls.
Gross risk = (importance * urgency) * (likelihood * impact)
The scaling for each element above, including Risk controls, is a simple numerical range between 1 (low risk) and 3 (high risk). Definitions attribuatable to each element are specified as part of an overall ERM program document. Assignment of risk "levels" is either by subjective agreement among experts or the result of stochastic outputs.
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Ken Dolan
Asst. Treasurer - ERM
MDU Resources Group, Inc.
Bismarck ND
United States
ken.dolan@mduresources.com-------------------------------------------
Original Message:
Sent: 01-23-2009 09:30
From: Manminder Jagait
Subject: Residual Risk and Opportunity
This message has been cross posted to the following egroups: Financial Services and Enterprise Risk Management.
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When an opportunity has been identified along with the exploiting methods, what would be the residual risk component of an opportunity?
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