Role of Risk Management in an Organisation

Role of Risk Management in an Organisation Task One – Individual Research Report The Task You are asked to research, critically examine and discuss the role of the ‘risk management’ function within an organisation. Examine and discuss the purpose of risk management within an enterprise. The purpose of risk management in an organization is to identify the possible problems before it occur in a business. Risk handling actions may be deliberated and raised as needed through the life of the creation or plan to alleviate opposing impacts on attaining objectives. Risk management is a constant and progressive process that is significant part of business. It address issues that endanger the achievement of objectives. Constant risk management method is practical to successfully expect and alleviate the risks that have serious impact on the plan. To have an effective risk management it should have a comprised aggressive and early risk documentation through the association and participation of related inventors. Technical issues are a main concern both early and during all plan stages. Risk management must deliberate both external and internal sources for schedule, cost, and technical risk. Examine and discuss the benefits of risk management within an enterprise There are a lot of benefits of risk management within an enterprise. Some of those are formation of a more risk that is focused on culture for the organization. In this the organization will implement ERM note that will increase the focus on risk. The senior ranks results in more conversation of risk at all levels. Discussion of risk and communication is recognized as a process to deliver information to senior management and also a way to segment risk information inside and through operations of the company. In that case it will let improved visions and decision making regarding risk at all levels. Regular risk reporting, ERM maintain better structure, broadcasting, and investigation of risks. Consistent reports can progress the focus of executive and directors by providing data that allows improved risk moderation decisions. Improved focus and perspective on risk. Efficient use of resources and effective coordination of regulatory and compliance matters. Examine and discuss each of the following risk management components explaining how they relate to the overall role of the ‘risk management’ function Reviewing of activities and internal environment The internal environment contains the manner of an organization, persuading the  risks awareness of its people, and the foundation for all other people. It provide  discipline and structure that the people will follow to avoid risk management. Internal  environment factors include an individual’s risk management and it over sight by the  board of directors its integrity, ethical values and competence of the individual. An  organization’s internal environment has a significant impact on how enterprise risk  management is implemented and functions on an ongoing basis. Setting objectives Objectives are set in every organization or business in order to evade risk management. Establishing a basis for operations, reporting, and compliance objectives. Every  Individual have a different risks from internal and external sources, and a qualification  active incident, documentation of risk assessment, and risk response to establish  objectives aligned with the individual risk desire which drives risk tolerance levels for  the object. Also objective is the guide that one business should follow  in order to have a good outcome. Event identification Management identifies potential event that will affect the individual and determines whether they represent opportunities that might adversely affect the individual ability to successfully implement strategy and they will achieve their objectives. Event should be positive impact so that no rick will develop in individual which will lead the management assessment and response. Risk assessment with particular reference to the impact and likelihood of risk Risk assessment allows a person to deliberate the level to which potential events have  an impact in achieving the objectives. In risk assessment it can be qualitative or  quantitative methods wherein they can used questionnaires that they can distributed to  the employee and the company or business owner will be able to determine what the  risk management problem in the company. They will assess it together with the top  management and the board to develop a certain solution that will help them  in resolving the risk management. Risk response plans After assessing the relevant risk, management now determines how will respond. Responses may include risk avoidance, reduction, sharing, and acceptance. In  seeing its response, management assesses the result on risk likelihood and impact,  as well as costs and benefits. Management identifies any opportunities that might be  available. At the completion of its risk response actions, management may have a view  of individual risks and responses and their place with associated acceptance. Control activities Procedure and policies that help ensure that the management risk respond is carried out  is the control activities. Also the activities happen all over the organization in all  functions and levels. Control activities include a variety of activities such as  reconciliations, authorizations, verifications, approval and reviews of operating  performance also segregation of duties and security of assets. Control activities generally  established to ensure risk responses are appropriately carried out by individual with  respect to certain objectives. Information and communication Relevant information is identified, taken, and communicated in a form and now the  people are given timeframe that enable them to carry out their responsibilities. Information gathered are generated as data. That information will provide the  management the risk that they need to resolved and making informed decisions relative  to objectives. Effective communication also have an important role in risk management,  it is one of the important factors in a company. All workers must get a clear message  from the management that enterprise risk management responsibilities must be taken  seriously. They should understand their own role in enterprise risk management, as well  as how they will relate the activities to their work and to the work of others. They must  have a means of communicating significant information upstream. There is also effective  communication with external parties, for example customers, suppliers, regulators, and  shareholders. Monitoring Enterprise risk management is monitoring and assessing the presence and functioning of its mechanisms over time. This is being done through ongoing monitoring activities. The management do evaluation to monitor the performance of the people. Through evaluation they will know if the people in the company are implementing the objectives and no risk management will happen. Ongoing monitoring occurs in the normal course of management activities. The opportunity and occurrence of separate evaluations will depend mainly on the assessment of risks and the effectiveness of constant monitoring actions. Enterprise risk management deficiencies are reported to top management and the board.