In Chapter 6,LEGO group had, initially, difficulties in implementingan effective ERM strategybecause they focused on operational risks at the unitlevel and did not consider the same at the enterprise
REPLY 1
Shiva Kumar Pagadala
week 3 Discussion
COLLAPSE
Top of Form
Enterprise risk management this is a strategy plan based program that helps in preparing and identifying the dangers the organization might face and any other disaster which may disrupt the organizational goals from achievement. In various business institutions entrepreneurs take note in enterprise risk management as an effective measure in operating their premises, this helps on improving the performance and information system or competition advantages including the strategies to be involved to overcome risk (Florio & Leoni, 2017).
Business strategy involves the approach of an organization for competition of customers through value improvement in order to gain advantageous measure in terms of competing the competitors. Competition is a major threat when it comes to growth of accompany. If an organization fails to align properly the risks that it experiences in line with the business strategies, it might engage itself in dealing with different risk which are not necessary on or relate to its long-term goals. Therefore, it is during this part the business or the organization should understand how equivalent is enterprise risk management figures out how the objectives which are part of the organizations growth.
Enterprise risk management in organizations they have need in strategizing the operational risk which the business encounters as a way of curbing the risks that hinders its growth. Through research it is observed organization face challenges due to its operating time. During developing of an enterprise risk management, many factors needs to be considered in order to understand the risk to be taken by the organization and what measure to look upon on overcoming the risk. This is a crucial part in regard to enterprise risk management since most business experience various risks, thus the organization comes with a better way of operating the business (Olson & Wu, 2020).
Many organizations should train their staff on the information about risk awareness. This is another thing that needs to be considered while preparing the business strategy, because it is very important to educate the workers issues which might face their organization so that they be aware of what they might experience during tough times. Therefore, enterprise risk management need to address this issue since the labor within an organization is a major resource on ensuring the objectives have been obtained through implementation. Once employees understand what risks they undergo through still the organization comes up with a way of overcoming the challenges which faces them (Oliva, 2016).
Since we live in a dynamic world some risk keeps on changing thus entails us we should not remain stagnant with the enterprise risk management made at some point. This helps us to keep on strategizing the ERM and cope up with new risks with might arise, hence organizations need primarily to monitor its risks and look for effective ways of managing the risk. This comes as a result of information systems.
References:
Florio, C., & Leoni, G. (2017). Enterprise risk management and firm performance: The Italian case. The British Accounting Review, 49(1), 56-74.
Oliva, F. L. (2016). A maturity model for enterprise risk management. International Journal of Production Economics, 173, 66-79.
Olson, D. L., & Wu, D. (2020). Enterprise risk management in projects. In Enterprise risk management models (pp. 165-177). Springer, Berlin, Heidelberg.
Bottom of Form
REPLY 2
Rohith Reddy Mandala
Discussion 3
COLLAPSE
Top of Form
Enterprise risk management, commonly denoted as ERM is a business practice that entails the application of techniques and processes to mitigate risks while seizing any potential opportunities in relation to goals and objectives attainment. From Chapter 6 LEGO's case, it's evident that enterprise risk management processes that are focused and consistently aligned with the organization's local, unit requirements, as well as priorities, offer the greatest benefits to respective entities (John, Betty, & Kristina, 2020). Organization's local, unit requirements as well as priorities tend to change with time often, and when enterprise risk management programs fail to address involved changes, related business efforts become reactive, and misaligned all of which negatively affect smooth operations of an organization. As a result, an organization diverts from its goals and objectives. Besides, misaligned enterprise risk management initiatives force organizations to be compliance-focused, instead of being supportive to required strategic decision making (Hyatali, & Fai, 2016).
There are several strategies through which an organization can align its enterprise resource management strategy with involved local, unit requirements, and priorities. The first strategy entails undertaking a thorough analysis and reporting on involved local, unit requirements and priorities then identifying potential risks that can occur at the various levels of operations involved; locally, regionally, and internationally. The next strategy is assessment, where an organization defines various explicit scales of risks; high, medium, and low risks within its local, unit requirements, and priorities. The next strategy is handling, whereby an organization assigns the various identified risks to several owners fostering action as well as accountability. The risk owners will work to identify risks, send alarming warnings to other parties with an organization. Next, is deducing ways through which they can be incorporated into enterprise risk management. Developing a common language as well as a common framework are additional strategies for incorporating an organization's local, unit requirements, and priorities to enterprise risk management. Here, an organization defines common language and framework to be used by individuals working to mitigate risks at various points of operations. This makes it easier for all involved parties to operate effectively, aligning local, unit requirements, and priorities with the adopted ERM program (Fiol, 2019).
References
Fiol, F. (2019). Enterprise risk management: Towards a comprehensive yet practical enterprise risk function. Journal of Risk Management in Financial Institutions, 12(4), 320–327.
Hyatali, N., & Fai Pun, K. (2016). Aligning Project Quality and Risks into Business Processes: A Review of Challenges and Strategies. West Indian Journal of Engineering, 38(2), 81–92.
John, R., Betty, J., & Kristina, N. (2020). implementing enterprise risk management: case studies and best practices. Wiley.
Bottom of Form
