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By Staff Reporters
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Authentication:
The verification of the identity of an individual, system, machine, or any other unique entity
Authorization:
The process of allowing access to specific areas of a system based on the role and needs of the user
Committee Charter:
A document that defines the purposes and responsibilities of the oversight committee
Compliance Risk Profile:
The current and prospective risk to earnings or capital arising from violations of or nonconformance with laws, rules, regulations, prescribed practices, internal policies and procedures, or ethical standards
Control Assessment:
A high-level review and analysis of controls relating to a process; should encompass both current and missing controls
Controls:
Methods that preserve the integrity of important information, meet operational or financial targets, and/or communicate management policies (See also: Key Control, Secondary Control, Tertiary Control)
ERM Policy Statement:
Defines an organization’s approach to and method of enterprise risk management
Governance:
Processes and structures implemented to communicate, manage, and monitor organizational activities
Impact:
The influence and effect of a risk
Inherent Risk:
Risk that is inherent to a process, taking into consideration the likelihood and impact of a risk
Key Control:
A primary control that is essential for a business process; typically takes place during the process it applies to
Key Indicators:
Measurements that are important for organizations to monitor for potential issues; examples include key performance indicators (KPIs) and key risk indicators (KRIs)
Key Performance Indicator (KPI):
A measurement with a defined set of goals and tolerances that gauges the performance of an important business activity
Key Risk Indicator (KRI):
A proactive measurement for future and emerging risks that indicates the possibility of an event that adversely affects business activities
Likelihood:
The probability of a risk occurring
Mitigation Actions:
The necessary steps, or action items, to reduce the likelihood and/or impact of a potential risk
Operation Risk Profile:
1) The risk arising from the execution of an organization’s business processes;
2) The risk of loss resulting from failed or inadequate internal processes, systems, people, or other entities
Price Risk Profile:
The risk to earning or capital arising from adverse changes in portfolio values
Process:
1) The principle elements of essential business functions within work groups or business units;
2) A set of tasks completed by business continuity plan owners within a department
Reputation Risk Profile:
The current and prospective risk to earnings or capital arising from negative public opinion or perception
Residual Risk:
Risk remaining after considering the existing control environment
Risk:
A potential event or action that would have an adverse effect on the organization
Risk Appetite:
A statement that broadly considers the risk levels that management deems acceptable
Risk Assessment:
The prioritization of potential business disruptions based on the impact and likelihood of occurrence; includes an analysis of threats based on the impact to the organization, its customers, and financial markets
Risk Tolerance:
A metric that sets the acceptable level of variation around organizational objectives and provides assurance that the organization remains within its risk appetite
Secondary Control:
An important control that typically takes place after the process it applies to (i.e., reporting or ongoing monitoring)
Strategic Risk Profile:
The current and prospective risk to earnings or capital raising from adverse business decisions, improperly implemented decisions, or lack of responsiveness to industry changes
Tertiary Control:
A non-essential control that can still be applied effectively to a business process
Velocity:
The time it takes a risk event to manifest itself
Vulnerability:
An entity’s susceptibility to a risk event as determined by the entity’s preparedness, agility, and adaptability
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