Business Strategy and Risk Management

Factors that can affect strategy and objective achievement originate from outside the company and include social, political, and economic elements.

Factors that can affect strategy and objective achievement originate from within the company and include elements like technology, personnel, processes, and infrastructure.

Risks associated with taking an opportunity. It involves analyzing potential negative consequences of pursuing a course of action.

Risks related to disruptions caused by technology, including privacy breaches, disaster recovery issues, cyberattacks, and security vulnerabilities.

Disruptions caused by inappropriate behaviour of individuals, mainly senior management, affecting the company's operations and performance.

Disruptions caused by problems with processes, including IT system failures, faulty products or services, and inadequate information management.

Disruptions caused by problems with products or services, including delivery of defective goods or components, inadequate information management, and failure of communication or transport systems.

A situation in which the information flow, data processing, and internal communication systems are affected, often leading to operational disruptions or data loss.

Risk management activities should ensure that appropriate risk-based information is available to support decision making.

Corrective, preventive, and detective measures are all types of hazard control.

Insurance acts as a mechanism for transferring the financial impact of losses arising from hazard risks and, to a lesser extent, control risks.

When a risk has a low likelihood but a high potential impact, organizations may choose to transfer the risk to another party.

Terminating a risk is equivalent to eliminating the risk entirely.

Transferring a risk is equivalent to contracting with another party to assume the risk.

Treating a risk involves actions taken to reduce the likelihood or impact of the risk.

Tolerating a risk means accepting the risk and taking no action to reduce it.

Risks that have a high or very high impact on the organization, are likely to occur at or above the benchmark level, and have significant potential for cost-effective improvement in control.

Focuses on decreasing the negative impacts of incidents while keeping repair costs as low as possible.

Components of the external context when evaluating reputational risk include: governance standards, product/service quality, public perception of the industry, and corporate social responsibility.

Customers are often the most important external stakeholders for many organizations.

Controls that focus on detecting problems or irregularities after they occur.

Examples include: checking driver licenses for violations, inspecting vehicles for damage, and reviewing fuel consumption to identify aggressive driving.

Evaluating the external context helps understand the potential risks and uncertainties that could impact an organization's operations and success.

The marketplace component of the external context includes factors like aggressive competitors, customer expectations, economic stability, supply chain complexity, and exposure to disruptions like technology or geopolitical events.

The risk management context encompasses the framework and processes used to identify, assess, and manage risks. It includes governance, culture, strategy, objective-setting, and internal and external communication.

The internal context considers the elements within the organization that influence risk, such as its structure, processes, people, and resources.

Top-down risk assessment involves starting the evaluation from the highest level of the organization and then cascading it down. While this ensures consistency and a company-wide approach, it can be less detailed and miss risks at lower levels.

This involves ensuring that an organization has enough money to cover its financial obligations, both present and future.

This refers to the ability of an organization to manage its money effectively, including processes for allocating funds for investments and preventing fraud.

This addresses whether sufficient funds are available to execute strategic plans and cover future financial needs.

This involves ensuring that an organization has procedures in place to allocate funds correctly for investment, promoting financial stability and profitable growth.

This assesses the overall financial procedures and policies that influence how a company manages its money and generates profits.

This addresses the organizational culture and senior management's attitude toward risk. It is crucial to avoid excessive risk-taking, which could lead to financial instability.

This aspect focuses on the availability of sufficient physical assets, such as buildings, equipment, and infrastructure, to support operational activities.

This involves having systems in place to ensure operational continuity in case of major disruptions, such as natural disasters or cyberattacks.

Identifying and analyzing potential problems that could affect your objectives, core processes or key dependencies. It involves collecting ideas from different individuals and brainstorming solutions.

A visual representation of a process with clear steps, showing how tasks depend on each other. It helps identify potential bottlenecks and risks.

Thorough examinations of facilities, operations, and systems to ensure compliance with established rules and regulations.

Gathering ideas from a large group of people online, often used to get diverse input on risks or solutions.

Using structured questions and checklists to gather information about potential risks, allowing for consistent and efficient data collection.

A method for evaluating risks that involves starting from the bottom of the organization and working up. Individual teams identify and assess their specific risks.

A potential drawback of bottom-up risk assessment is that it might overlook emerging risks that aren't being reported by operational staff.

A potential drawback of bottom-up risk assessment is that it can become too focused on small details and lose sight of the broader picture, leading to a siloed approach where different parts of the organization are unaware of each other's risks.