RISK MANAGEMENT
Is Your Strategy Secure ?
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The failure to properly evaluate and challenge risk of overall business strategies was probably the biggest intellectual failure of boards , regulators and shareholders .” Lord Adair Turner , Chairman of the UK ’ s Financial Services Authority .
Understanding Strategic Management
The discipline of strategy management focuses on creating a clear sense of direction for the business , including where it is headed , how much risk it is willing or needs to take to get there , and the main opportunities and threats that may arise along the route . In order to achieve the objectives of the business and improve performance , strategic management integrates multiple functional areas in a formal and methodical way .
Strategic Management
Strategy Formulation - the key elements are vision , mission and goals of the organization . The other elements are the external and internal analysis , industry analysis and competitive analysis . Establishment of long-term objectives and generation , evaluation and selection of strategies also takes place here .
Strategy Implementation - there are three key elements that affect strategy implementation . These are organizational structure , people and leadership , processes and organizational systems .
Strategy Evaluation and Control - the evaluation model , processes , and criteria , as well as control techniques and mechanisms , are crucial for enhancing organizational performance and achieving organizational goals .
By Reuben Kisigwa
The risk management architecture
The development and protection of value is what risk management is all about . By safeguarding the strategies , it enhances performance , promotes creativity , and aids in the attainment of objectives .
Risk management is all about understanding the risks the organization faces in pursuit of its objectives , and the continuous monitoring and management of those risks . It is also about understanding that risks can present opportunities as well as threats .
As part of the strategy management process , a wide range of critical risks are recognized in relation to the objectives . To increase the likelihood that the organization ’ s objectives will be met , these are then monitored and managed .
Before the organization can think of strategy , senior leadership through the risk management architecture should have already defined the organization ’ s appetite for risk within the context of strategy and then execute accordingly .
It is in these three components that we find what we call strategic risks - risks that either affect or are created by an organization ’ s strategic management model . Although these risks might result from internal operations , they are frequently produced by outside factors that alter the organization ’ s larger business and the dynamics of the industries in which it operates .
The three Components of
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The development and protection of value is what risk management is all about . By safeguarding the strategies , it enhances performance , promotes creativity , and aids in the attainment of objectives .
According to Risk Management Standard ISO 31000 , the risk management architecture comprises of a set of risk management principles , which are used to guide the establishment of the risk management framework . The framework is then used to guide the establishment of the risk management process .
The principles offer direction on how to communicate the value of risk management and explain its objective and purpose while also identifying its qualities that make it effective and efficient . When developing the organization ’ s risk management framework and procedures , the principles , which serve , as the cornerstone for managing risk should be taken into account . These guidelines should make it possible for an organization to control how uncertainty affects its strategy , and consequently , its objectives . The purpose of the risk management
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