Organizational Risk Management: Perceptions & Frameworks
Task: Drawing on independent research and critical analysis of the concept of risk, evaluate the impact people within an organisation can have on the successful implementation of a project in complex operating environments. Use real case studies and examples to support your argument.
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The report is addressing a concept of organizational risk management and analyses the impact that stakeholders have in the scenario of project implementation in an organization. The report has drawn its responses from specific case studies on a related topic for linking with actual physical examples. The area covered is the definition and general classification of "Organizations Risks", with its full complication and involvement in business decisions and practices. The report has been structured as per the demands of the assessment itself and doing so has deviated from a more conventional structure. The use of references and case studies has been justified with their rightly use and relativity with the topic in hand. The report is estimated to gain its strategic footing if it could entice the reader in the route of a deeper understanding. The report has endeavored to touch upon several factors that were associated with the estimation topic from the offset. Thus, the points presented are secondary while the critical commentary is a primary input
The definition of risk in context of organizational risk management is a secondary factor when it is counted against the backdrop of the comprehensible perception of the risk itself. Originating from the French term “risque”, the word has been brought into English lexicon as a glossary of some insurance documents that date back to 1730. The specification alone is sufficient enough to figure that the word has severe organizational value as it is affiliated with factors as project introduction, Project implementation and its invariable success. The term could also denote a singular or a conglomerate of associated factors that could be proven detrimental for a certain business model given a set of detrimental circumstances.
Categorization of Risk
The categorization of risk could be demarcated along with some broad categories as Individual risk, Organizational risk or national risk. As observable in each stage, it is the intensity of implications that makes the risk factor to be considered. The assessment scope is determined by the "Organizational" viewpoint only which dictates the further specialization in terms of classifications. This generalized classification segregates the risk factors depending on the "Nature of effect" clause (ebsglobal.net, 2019). The usual classifications look somewhat like this-
- Project or Change risk.
- Operational risk.
- Strategic risk.
- Unforeseeable risk.
Apart from these specifications, there is a more unconventional approach towards risk segregation that prioritizes the "Nature" of the risk, as-
- Internal and external risks.
- Knowledge and financial risk.
- Interdependency risk.
- Static risk.
- Speculative risks.
Each of these typographical differentials has some level of involvement in an organizational atmosphere. Without the appropriate comprehension of risks involved a corporation could not locate specific resources to combat the nullifying effects of these circumstantial risks. The responsibility in most scenarios falls on the development and the project implementation team to figure out the risks that are applicable on the situational outcomes of a specific set of administrative or directive decisions (Hardy & Maguire, 2016). The classifications help in an efficient, practical and effective protocol set up each time the organization is confronted a certain risk in the first place. In most calculative estimations the equational presence of risk is presented as "ƒ”.
Concept of Risk perception
While the factor of "Risk" is the conglomerated validation of extraneous factors that are accounted for on a timely basis within the enclosure of an organization or a financial enterprise, the definition often excludes the opposite aspect of the plane, that of individual or accumulated perception. The factor of "Risk perception" is thus the representation of a personal perception from which the risk and its apparent or immediate effects are to be analyzed. The model of risk perception was first introduced as a physical representation of related theories as-
- Cultural theory in form of Sociology or anthropological approaches.
- Psychological theories as cognitive or heuristics approach.
- Interdisciplinary perceptions as risk framework model and social amplification model (Liu & Almor, 2016).
Each of these models has its fair share of involvement in the modern conception of risk perception and its implementation value as a considerable factor nonetheless. Risk perception and its scale depend on a holistic approach and thus encompass all traditional models on a single thread for directional references. With passing time factors are being added in this mix for added reinforcement and for a more accurate reading of the same risk factor from multiple perspective lenses, as Sensitivity of previous probability analysis, sample scope and size, event validity and event predictability, relativity biases, correlation, imaginatively, regression factors and many more.
The recent inclusion of "Psychometric paradigms" could also be cited as it has included personal aspects like emotion, stigma, and effect for the final estimations (svt.ntnu.no, 2018).
In the scenario of a project or model implementation within the organizational risk management, there are many subsidiary factors that collectively decide whether the transformation would be on a positive, neutral or negative scale. One of these factors is "Project Risk" which was previously identified in the portion of risk categorization. As the name implies the risk revolves around considerable changes that are to be expected in the duration of project implementation. Most of the development failures are caused by the mismanagement of understanding affiliated risk factors within due time. The usual stages of implementation include-
- Realization of benefits
- Data collection
- Security of information
- Stakeholder training
- Emergency measurements (cimaglobal.com, 2018)
Along these stages, the stakeholders are the first along the line of primary contact and many international events and specifically Australian context have attested to these specifications. Each level of this standard implementation plan includes categorical risks that are to be resolved before the project could be commenced. This assessment intends to bring for the involvement that the stakeholders have on the successful locomotion of business procedures. The international business perspective has shown that there are very few instances that a project has been implemented without encountering any specific administrative or environmental risk (scielo.conicyt.cl, 2016).
Complex risk or complicated risk?
The modern lexicon, as per the contributions of "Dr. Peter Mark Roget" has been treating both these terms as equivalent synonyms, but the reality is somewhat skewed. But more modern approaches have estimated that both these terms have reserved values in Economic and business association, which could be a matter of perceptual change for many readers as well. A risk when termed as complicated implies that it is hard to figure out but they are addressable by values, rules, and standard protocols. The Complicated risks outlined within the organizational risk management framework could be mitigated by setting a systematic process much like the hierarchical chain of command in an organization (sloanreview.mit.edu, 2019).
A complex risk, however, has a different set up altogether. The model applied to resolve a complicated risk is rendered insufficient for complex risk. Complex risks relate to many factors and processes that are outside the domain of control. Technological disruptive forces as the blockchain, Innovative business model, a novelty product or a better system project could be cited as examples of complex risk paradigms. These risks do not allow any predisposed notion that could be implemented for cautionary approaches in any form as there are no standard guidelines. Most industries or organization confront such risks without understanding their implicational values in the process. For a more visual contextualization, while a motor vehicle could be seen as a complicated problem, the traffic system counts as a complex system. The motor vehicle could be maintained and repaired with pre-existing guidelines but the traffic regulations could not be as it is dependent on the discrepancy of other extraneous factors that do not abide by any specific rule (zerocarbonhub.org, 2015).
Discuss conventional risk framework of organizational risk management
The identification and the subsequent risk assessment have to be met with an action plan accordingly. This mentality results in subjecting the risk factor to a preset blueprint that is commonly termed as Conventional framework for risk handling and mitigation. From a standard point, an ideal risk framework looks as such, -
- Risk departmentalization or risk segregation
- Each silo, unit or department is to deal with their own factors independently
- The stakeholders are to maintain distance as not affect the productivity of another department in any manner
- It also focuses on the prevention of specific loss within the department
- It is to safeguard financial and physical assets from uncertainties.
- The department is to implement available expertise and resources allocated to them (communication.oxfordre.com, 2019).
The case studies have hinted at a predisposed model that has in fullest effect in many organizations across the economic landscape. Yet recently the structure has shown signs of inefficiency that could not be overlooked. Various organizations both in private and public sectors, industrial entrepreneurs have tacked this framework according to their own needs. This attitude has produced a different set of protocols that resembles the following-
- The initial approach and perception are to be "Holistic".
- The risk management policies emanate from the overhead of the organization, generally a board of director.
- Board puts its emphasis on the whole organization
- The primary target is on risk synthesizing, promotion of sustainability that facilitates savings on an organizational level.
- Assessment of assets that also include intangible factors under its wings.
- The implementation of strategy setting models throughout the organizational model (entrepreneur.com, 2019).
Cases of Exceptional risk management
The Fuzzy set theory implementation: The idea was implemented in the independent research model by "Xianbo Zhao" on the context of Singapore's green project, a construction initiative that was tangled with project risks and uncertainties. The approach taken by the construction developers and investors is claimable as they implemented the "Fuzzy Synthetic" evaluation model as per the requirement of statistical analysis (Zhao, Hwang & Gao, 2016). The stakeholders implemented their collective enterprises and were able to successfully incorporate the "Green policy" in their business model. Historically the implementation of a Green project has always fetched managerial risks on its wake, but in this scenario, the case implied a positive outcome. The identification and the handling of the risk factors as political and economic are in line with the principles mentioned in this assessment (infoentrepreneurs.org, 2019).
BPA and PIA approach in practice: This particular case study of organizational risk management was more inclined with the "Political Risks" from a legitimized-based view model. Like the first case pointed the case also implements a holistic approach that argues the primary political risk factors as they are registered by Google and Yahoo in their domestic market and also in the foreign market namely China. The differentiation among these two market offerings has been analyzed intrinsically with the facilitating political risks involved. As the research has donated, both these companies refrained from the traditional model of "Risk management" as their own situation called for a complex risk mitigation model. Thus, the bargaining power-based approach and the political institution's approach were considered for the delineation of the risks involved. The stakeholders made strive in unison that resulted in a successful market inclusion which in the majority of cases involves major set-offs (Stevens, Xie & Peng, 2016).
The factor of Employees: In "Risk management of SMEs", the researcher "Eva Maria Falkner" had identified a string of findings that have connected the concept of "Project implementation" with knowledge and employees. For the researcher, the presence of long-term employees could benefit an induction process as they have subjective inclusion in the actual project by virtue of previous knowledge. The SME sectors of Britain thus strived to retain their experienced employees for additional risk management benefits. This finding has confirmed the assessment notion that people within an organization as stakeholders could have many positive attributes for project induction based on a complex business environment as SME (Falkner & Hiebl, 2015). Their model challenges the conventional framework for a more accurate representation of the factors that are needed to be confirmed (sciencedirect.com, 2019).
The observable impact on stakeholders and vice versa
Therefore, from the cases presented in the above section, it is evident that risk management is based on the internal perception of the risk itself that differs from business model to model ratio. The consideration of the stakeholders is the only intangible factor. The complex elements of risk management are dependent on the perception of the risk from organizational or stakeholder perspective. In such a scenario one must look no further than the real world that has many examples of situational exceptionality that could be studied and harnessed for potentiality (simplicable.com, 2019).
To conclude the report on organizational risk management, it would be appropriate to point to the fact that risk as a singular factor is omnipresent and could be assessed in practically in any given scenario regardless of the cautions and risk management protocols. Thus, the primary assessment was not the definition of risk as a factor but the assessment of the perceptual measures that could be used against an impending risk factor. The results have been assessed from the case studies which deal with some form of organizational risk. This current assessment model is to discern the multi-layered impact the stakeholders could theoretically have on the induction of a project from the offset and that too against a modern and complex business structure that could be identified on a global scale as well. Organizational risk management assignments are being prepared by our risk management assignment help experts from top universities which let us to provide you a reliable assignment help online service.
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