ALAFCO derives its approach to risk management and control from a perspective of enhancing value. As a result, the risk management process takes a holistic approach to managing risks on an enterprise-wide basis. This involves focusing on the identification of the key risks that affect the achievement of ALAFCO’s objectives. Such risks are firstly understood on an inherent basis, which involves understanding the main drivers of such risks in the absence of any controls. Thereafter there is an assessment of the residual level of risks, taking into account the controls that are in place to manage such risks. Where the residual level is outside the acceptable limits, further controls and action are defined to bring the risks within the limits.
The Risk Management Framework of ALAFCO comprises of the following key elements:
- a. Risk Appetite Statement
- b. Risk Management Policy
- c. Risk Monitoring Plan
- d. Risk Reporting Framework
- e. Formal mechanism to identify, quantify and manage risks at inherent and residual level.
- f. Formal process for Risk and Control Self-Assessment (RCSA)