Risk Management Program For A Small Community Bank

Risk Management Program A risk management program provides the framework for an organization to assess the risks that the company faces. As a Chief Risk Officer (CRO) for a small community bank with one location, employing 30 people either in full-time or part-time positions, it is important to develop a complete, thorough risk management program for the bank. A thorough program involves planning, organizing, leading and controlling the resources of the bank in order to achieve the organization’s overall objectives (Elliott, 2012). The objectives of the bank include remaining profitable, yet, serving the needs of the small community where it resides, with roughly a population of 100,000. The overall risk management program for the†¦show more content†¦1. Gap Analysis 2. Evaluation of Internal and External Environments 3. Integration into Existing Processes 4. Commitment of Resources 5. Communication and Reporting 6. Monitoring and Improvement. Traditional Risk Management Traditional risk management deals with hazard risks to the organization. Hazard risks, or negative risks, are transferred through of through the use of insurance or to an external party (Elliott, 2012). A CRO must align the objectives of the risk management program with the objectives of the organization. This involves understanding the tolerable uncertainty or risk tolerance that the management can handle. If the bank management tends to be very conservative and risk adverse, then the risk management program will have to take that into account especially in areas of insurable hazard risks. When an organization is assessing hazard risks using traditional risk management techniques, the CRO is evaluating risks based solely upon the event in question and its probability of occurrence without any regard to interdependence on other factors (Elliott, 2012). Three hazard risks that the management program has prioritized are the risks of property loss, of wo rkplace violence, and of business interruption. Figure 1. Traditional risk hazards was adapted from Elliott, M. W. (2012). Risk management principles and practices (1st ed.). Malvern, PA: The Institutes. Property Loss Risk The risk