In doing so, it will look both at its industry and its competitors and at how it manages its own products and services. Firms should be aware of risks from its own history. This raises the awareness of the risk problem. Top-down looks for faults by examining the system and seeing where it failed. The building block method looks at the effect of a particular basic event on the overall system.
Firms tend to use a mixture of methods.
Module 8 has the coverage here, and the above is a reflection of that. The student may take a section of the above and expand upon it. Risk management systems need to have forward-looking processes that capture the potential outcome before it becomes an actuality. This is the value at risk method. Limits can be placed on the accounting information to make it more useful in this context.