Managing the Right Risks at the Right Time
White Paper Summary
Risk aggregation is all about ensuring that anyone looking at risks understands the relative importance of each risk and is confident that the appropriate risks have bubbled up to the surface. When assessing risks, there is essentially an opinion provided as to the expected impact and likelihood. In other words, there is no real certainty as to the timing or magnitude of a risk event. Of course, if there were certainty, there would be no risk and insurance would be impossible as there would be no transfer of risk.
Whenever risk is assessed, it is commonly done so based on a combination of individual experience, historical data and personal bias. Unfortunately, there is no magic bullet to arrive at the “correct” assessment of impact and likelihood. As a further complication, a truly effective enterprise risk management process must aggregate risks together to provide relevant stakeholders with the information they need to understand the risks and to make the appropriate decisions on how, or if, to mitigate these risks.
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