Risk Management Argumentative Essay Sample
A limited time offer!
Get a custom sample essay written according to your requirements urgent 3h delivery guaranteedOrder Now
Risk Management Argumentative Essay Sample
The following outlines the process for developing a risk management profile. 1. Establish the context
●Define and identify the environment, characteristics and stakeholders, their goals and objectives, and the scope of the specific risk management process.
●Develop criteria against which risks are evaluated and identify the structure for risk management.
2. Identify and describe risks
●Risks are best identified through a collaborative approach involving a cross section of stakeholders.
●All conceivable risks must be considered. Ensure any certainties are identified as problems and addressed in the risk management profile.
3. Conduct current risk analysis
●An analysis of the risks is conducted to determine their causes, and estimate their probability and consequences. This analysis provides the basis for working on the ‘right’ risks.
4. Conduct risk evaluation
●Risks are considered and prioritised according to their potential impact, and each risk is assessed to determine its level of acceptability.
5. Develop and implement proposed risk treatments
●Risk treatments are developed to cost-effectively reduce, contain and control risk.
●Formal risk management reporting mechanisms are defined and documented.
●Categorise the risk likelihood.
6. Monitor, report, update and manage risks
●As risks change constantly, the risk profile is continuously monitored, reviewed and updated by management. New risks may be identified as more information becomes available and existing risks may be eliminated through the effectiveness of the risk treatments/actions. Record risks identified through regular audit on the risk audit log. Record risk management activities on the risk management register.
MacVille’s Risk Areas
The following are four broad areas where potential for risk to MacVille has been identified. Under each area, examples of possible risks are detailed. Operational/Organisational
●Legal and regulatory compliance
●Resources: human, physical
●Infrastructure, plant and equipment
●Fraud or theft
●Loss of income, funding/finance
●Conduct of board
●Conflict of interest
●Procedures and tools for project management
●Stakeholders – strength of relationships/conflict of interest
Case study: Risk management strategy
MacVille recognises that risk management is an essential component of good management practice and is committed to the proactive management of risks across the organisation. The strategy is designed to:
●identify, evaluate, control and manage risks
●ensure potential threats and opportunities are identified and managed
●inform directors, senior management and staff members about their roles, responsibilities and reporting procedures with regards to risk management
●ensure risk management is an integral part of planning at all levels of the organisation. Guiding Principles
●MacVille is committed to achieving its vision, business objectives and quality objectives by the proactive management of risk at all levels of the organisation, acknowledging that embracing innovative ideas and practices carries with it risks, but that these are identifiable and measurable and therefore capable of being subject to realistic risk mitigation processes. Responsibility and Authority
●The directors have responsibility for ensuring that risk management is in place.
●The Finance, Audit and Risk Management (FARM) Committee has the responsibility of reviewing the Risk Action Plan on a six-monthly basis.
●The CEO and the senior management team have responsibility for managing risk and advising the Board on appropriate controls.
●The CEO and the senior management team support and implement policies approved by the directors.
●Key risk indicators will be identified, closely monitored and action taken where necessary, by the staff and directors. MacVille Risk Management Framework
This framework encompasses a number of elements that together facilitate an effective and efficient operation, enabling MacVille to respond to a variety of operational, financial, commercial and strategic risks. These elements include:
●Policies and procedures: A series of policies underpin the internal control process.
●Reporting: Decisions to rectify problems are made at regular meetings of the senior management team.
●Business planning and budgeting: The business planning and budgeting process is used to set objectives, agree on action plans and allocate resources. Progress towards meeting business plan objectives is monitored regularly by the senior management team and by directors at board meetings. Contingency planning is undertaken as required. ●Risk Management review: The Finance, Audit and Risk Management (FARM) committee is required to report at Board meetings on internal controls.
●CEO: The CEO has responsibility to brief the Directors periodically and as appropriate on the development of policies and procedures to ensure effective and efficient operations, risk management
strategies and implementation.
●External audit: The final audit of financial statements is controlled by an external chartered accountant who provides feedback to the Board through the FARM Committee. Definitions
Risks are identified on a scale of likelihood of occurring in the next 12 months and assigning an impact or consequence to the risk as high, medium or low. High includes either a significant shortfall of around 40% in achieving budget or a significant reduction in ability to function. Medium includes either a shortfall of budget of between 10% and 20% or some reduction in function. Low indicates minor reductions in achieving budget or minimal reduction in performance.