Provide answers to all of the questions below
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Australian Institute of Management *
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Information Systems
Date
Dec 6, 2023
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Uploaded by simran9609
Provide answers to all of the questions below:
1.
Explain the risk management process. You may answer using a labelled diagram
or in words (or both) and must include:
a definition of risk management.
a list or illustration of the steps in a risk management process.
a description of what each step involves. (275-300 words)
Definition of risk management
Risk management defines the identification, analysis and response to the risks that
arise in the business. Effective risk management means controlling future results by
taking active rather than passive actions as much as possible. Therefore, effective risk
management provides the potential to reduce the likelihood of risk occurrence and its
potential impact.
A list or illustration of the steps in a risk management process
Identify risk
Assess risk
Control risk
Review risk
description of what each step involves
1. Identify risk
Risk identification primarily involves brainstorming. Companies bring their
employees
together so they can review all the various sources of risk. The next step is to prioritize
all the identified risks. Since it is impossible to mitigate all existing risks, priority ensures
that risks that can significantly affect the business are addressed more urgently.
2.Assess the risks
In many cases, troubleshooting involves identifying the problem and then finding
a suitable solution. However, before figuring out the best way to manage risk, the
company must locate the cause of the risk by asking "What causes the risk and how
does it affect the company?"
3.Develop an appropriate response
Once a business entity decides to evaluate possible remedies to mitigate the
identified risks and prevent them from recurring, it must ask itself the following
questions: What steps can be taken to prevent the identified risks from recurring? Also, if
it is repeated, what is the best
way?
4. Develop preventive mechanisms for identified risks
Here, ideas that are useful for risk reduction are developed into a series of
tasks, which are then turned into contingency plans that can be implemented in the
future. If a risk occurs, the plan can be implemented.
2.
Describe a current risk management standard. In your answer:
name the standard.
explain the purpose of the standard.
list key elements of the standard. (230-250 words)
Name the standard
Risk management standards establish a set of specific strategic processes that start
with the overall aspirations and goals of the organization and are designed to help
identify risks and promote risk mitigation through best practices. The standard is usually
designed and created by multiple organizations that work together to promote common
goals to help ensure that organizations implement high-quality risk management
processes.
explain the purpose of the standard
The risk management standard is designed to provide those who need to implement
the risk management process with guidance to help them get to work. These standards
help to reach an international consensus on how to deal with certain risks and provide
best practice recommendations on how to deal with other risks. Risk management
standards help organizations implement tried, tested, and proven strategies.
list key elements of the standard
• principles underlying risk management
• the risk management framework
• the risk management process.
3.
Complete the table below to describe the types of business risk. (180-200 words)
Type of risk
Description
Example
Key responsibility
(at least two people)
Strategi
c risk
These risks can
occur at any time
and are related to
the business or
organization’s
strategy.
A company plans a complete
reorganization of its departments
but anticipates the risk that
employees will resist the change
resulting in process disruptions
and employee turnover. They
mitigate the risk by engaging
employees early in the planning
process.
•
CEO
•
Managing director
•
Board of directors
•
owner
Complian
ce risk
These risks
involve having to
comply with rules
set by government
or regulatory
bodies.
Potential for damage to living
organisms or the environment
arising out of an organization’s
activities.
•
Head of safety
•
Head of operations
•
Managers/supervisor
s
Financi
al risk
These risks affect
the financial health
of a business
(cash flow,
liquidity, financial
position, debt
burden etc.)
Investors holding foreign
currencies are exposed to currency
risk because different factors, such
as interest rate changes and
monetary policy changes, can alter
the calculated worth or the value of
their money.
•
CFO
•
Financial controller
•
Managers/supervisor
s
Operation
al risk
These risks are
associated with a
business or
organizations’
systems and
processes.
A mechanic leaves a tool inside a
jet engine resulting in the blowout
of the engine during flight. The
aircraft is able to return to the
airport, but the passengers are
shaken, the airline’s reputation is
damaged, they face a government
investigation, and the engine must
be completely replaced.
•
Head of operations
•
Managers/supervisor
s
•
Mechanic
4.
Complete the table to explain three different tools and techniques that may be
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used to identify risk. The first row has been completed as an example for you to
follow. (120-150 words)
Technique/tool
Description
Brainstorming
A group discussion to produce as many ideas or solutions to
problems
in a pre-determined amount of time.
Checklists
Check to see if your company lists the most common
risks. If not, you may want to create such a list. After
each project, conduct a post-mortem review to capture
the most important risks. This list can be used for
future projects. Warning: The list
is good, but no list contains all the risks.
Interviews
Select key stakeholders. Plan an interview. Define
specific issues. Record the results of the interview.
Cause and effect
diagram
The cause-and-effect diagram is powerful. Project
managers can use this simple method to help identify
the causes and events that lead to risks. By addressing
the causes, we can reduce or eliminate risks.
5.
Explain four options that a company could use to take to control risks. (60-80
words)
Avoidance:
Avoidance is a method of reducing risk by not participating in activities that may
cause injury, illness, or death. Smoking is an example of this type of activity, because
avoiding smoking can reduce health and financial risks.
Withholding:
Withholding is the recognition and acceptance of risks as facts. Usually, this
acceptable risk is to help offset the cost of greater risks in the future, such as choosing a
low-premium health insurance plan with a higher deductible.
Sharing:
Risk sharing is usually achieved through employer-based benefits, allowing
companies to pay part of the insurance premiums together with employees. In essence, this
shares the risk with the company and all employees participating in insurance benefits.
Loss prevention and reduction:
This method of risk management attempts to minimize
loss, rather than eliminate it completely. While accepting the risk, he still focuses on
controlling the loss and preventing its spread.
6.
Explain how legislation and its related regulatory requirements relate to risk
management. In your answer:
identify two different legislative and regulatory requirements that may apply to
risk
management.
for each legislative requirement, explain how it relates to risk management.
provide one example of how regulations support one of the legislations. (250-
280 words)
Record keeping policy
:
Information must be managed like any other asset, and it is vital to ensure
that security standards are sufficient to ensure that there is no leakage or unauthorized
use. It is not easy to manage risk in today's complex modern business environment. The
risks associated with record keeping and information management are often not
transparent to corporate risk managers. Record keeping and information risk add
another dimension of business risk.
The importance for managing record keeping and information risk are:
- Governance and cultural change
- Ensuring the integrity of records and information, especially the preservation of key
company
information.
- Measure performance of business units and workgroups against those standards.
- Provide consulting services to business units.
WHS:
Workplace health and safety procedures are the core elements of any HSE
management system. The procedures provide systematic steps to complete and
execute tasks in accordance with company policies, HSE management systems, and
the Occupational Safety and Health Act (WHS Act). You can think of these procedures
as a set of practical steps to manage risk and create a safer work environment.
The WHS procedure describes the requirements for meeting external and internal
compliance requirements. Company policies are frequently published and distributed to
workers; make sure everyone understands their role in following accepted work
procedures. Some areas covered may include high-risk activities.
The main objective of the safety policy is to protect workers from foreseeable or
unforeseen risks. Every organization has at least some type of policy for assessing
workplace safety and dealing with potential hazards. In addition to these policies, you
also need to comply with government regulations.
Policies and procedures are just one part of keeping workers safe. A ‘standard’ safety
management process includes:
Effective safety plans.
Policies and procedures.
Training and information.
Monitoring, supervision, and reporting of hazards and risks.
7.
Explain the purpose of risk management policies and procedures in the
workplace as they relate to risk management. (60-80 words)
The organizational policies and procedures for risk management are like the
rules governing football. In a football game, do players have to have certain equipment
to ensure the safety of the game? Football also has rules to determine what players can
and cannot do during the game so that they stay safe, and other players are safe too.
The organizational policies and procedures for risk management are participant
guidelines, telling each employee what the company they work for has expectations of
them and what measures the company will take to protect them from harm at work.
8.
Complete the table below to summarize how three policies and procedures relate
to risk management. (130-160 words)
Policy/procedure
Description
Record keeping policy
and procedure
The purpose of this policy is to define the principles that
underpin the Shire’s record keeping functions and the roles
and responsibilities of those individuals who manage or
perform record keeping processes on behalf of the Shire.
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WHS policy and procedure
WHS procedures outline the requirements for complying with
both external and internal compliance requirements. Company
policies are often published and distributed to workers;
ensuring that everyone understands his or her role in following
the accepted work procedures.
Confidentiality
policy/procedu
re
Confidential information is one of the most valuable assets
in any business. Confidentiality is often the best way to
protect trade secrets and valuable technical knowledge, if
they are not adequately protected by intellectual property
rights or if it is not attractive to use intellectual property
protection for commercial reasons.