Risk Management Policy

This policy outlines strategies for identifying, assessing, and managing various risks that could impact the financial stability of Universal Financial Associates Inc. Risk Management policy provides a structured and consistent framework for managing risk, ensuring that all risks are identified, understood, and managed proactively. It encompasses all types of risks, including strategic, operational, financial, compliance, and reputational risks.

Definitions

  • Risk: The possibility of an event or condition that could negatively impact Company’s ability to achieve its goals.
  • Risk Management: The process of identifying, assessing, controlling, and reviewing risks to ensure that the company’s objectives are achieved.

Objectives

  • To create a structured and consistent approach to risk management.
  • To ensure that significant risks are identified, assessed, and managed.
  • To promote a culture of risk awareness and proactive management.
  • To protect the company’s assets, reputation, and stakeholders.
  • To support the achievement of the company’s strategic objectives.

Risk Management Framework

Risk Identification:
All departments are responsible for identifying potential risks that could impact their operations. This includes risks related to finance, operations, compliance, strategic initiatives, and reputation.
Risk Assessment:
Identified risks will be assessed to determine their likelihood and potential impact. This assessment helps prioritize risks based on their severity.
Risk Mitigation:

For each identified risk, appropriate mitigation strategies will be developed. These may include:

  • Avoiding the risk

  • Reducing the likelihood or impact of the risk

  • Transferring the risk to another party (e.g., through insurance

  • Accepting the risk with a contingency plan

Risk Monitoring and Review:

Risks and mitigation measures will be regularly monitored. The effectiveness of risk management activities will be reviewed periodically to ensure they remain relevant and effective. 

Roles and Responsibilities

Board of Directors:
The Board of Directors is responsible for overseeing the risk management f ramework and ensuring that significant risks are managed appropriately.
Risk Management Committee:
The Risk Management Committee, composed of senior executives, is responsible for implementing the risk management policy, reviewing major risks, and ensuring that adequate resources are allocated for risk management.
Risk Owners:
Designated individuals within departments are responsible for managing specific risks, implementing mitigation measures, and reporting on risk status.
Employees:

All employees are responsible for understanding and complying with the risk management policy. Employees are encouraged to report any potential risks or concerns to their supervisors or the Risk Management Committee. 

Risk Management Process

Establish Context:

Define the internal and external context in which the organization operates, including the regulatory environment, market conditions, and organizational structure. 

Risk Identification:

Identify risks through various methods such as brainstorming sessions, SWOT analysis, review of historical data, and employee feedback. 

Risk Analysis:

Analyze identified risks to understand their nature, sources, and potential impacts. Assess the likelihood and consequences of each risk to prioritize them.

Risk Evaluation:

Evaluate risks by comparing the level of risk against predefined criteria. Determine which risks require treatment and prioritize actions. 

Risk Treatment:

Develop and implement strategies to mitigate identified risks. This includes assigning responsibilities, allocating resources, and setting timelines for action. 

Communication and Consultation:

Communicate risk management activities and findings to relevant stakeholders. Engage stakeholders to ensure their perspectives are considered in the risk management process.

Monitoring and Review:

Continuously monitor risks and the effectiveness of risk treatment measures. Review the risk management framework periodically to ensure it remains effective and aligned with organizational objectives. 

Reporting and Documentation

Risk Register:

Maintain a risk register that records all identified risks, their assessments, and mitigation measures. The risk register will be reviewed and updated regularly.

Reporting:

Regular risk management reports will be provided to the Board of Directors and the Risk Management Committee. These reports will include updates on key risks, mitigation activities, and changes to the risk profile. 

Training and Awareness

Training Programs:

Provide training programs to employees to enhance their understanding of risk management principles and practices. Training will be tailored to different roles and levels within the organization. 

Awareness Campaigns:
Conduct awareness campaigns to promote a risk-aware culture within Universal Financial Associates Inc. Encourage employees to actively participate in identifying and managing risks.