TJU WK 6 Enterprise Risk Management Different from Managing Strategy Essay
Hopkin discusses the MADE2 model that lists outputs from enterprise risk management. How do the components of this model promote a broader approach to risk management (i.e. an “enterprise risk management approach”– or does it?
I attached the required reading book, and please look at chapter 8,9.
Here are some examples from my classmates:
_____________________________________________________________________________________________________
The MADE2 model is inherently appealing to me because it offers a system where risk management decisions are supported with risk-based information. A logical process that optimizes the benefits of risk taking and mitigates loss and danger of compliance violations. In my organization, the overall enterprise has risk management in place, but individual departments still run themselves to a large degree. The danger is that decisions made at departmental or even on an individual basis are not guided with the same risk-based information as the overall enterprise.
In my field of healthcare, high-impact decisions are often still made by medical personnel with minimal if any training in business and/or risk concepts other than personal liability. The overall enterprise has surprisingly little awareness of the risk of regulatory noncompliance and other negative consequences of these decisions. The top level risk management considerations don’t seem to reach the ground level. The consequences of the siloed decisions on the ground level on seem to only come into focus when a sentinel event or adverse reputational outcome occurs that impacts the overall enterprise.
In response to “How do the components of this model promote a broader approach to risk management (i.e. an “enterprise risk management approach”– or does it?” The MADE2 model only works if there is a consistent bidirectional flow from the top to the bottom and the bottom to the top. If the organization is not PACED at all levels MADE2 will not be effective.
Hopkin, P. (2017). Fundamentals of risk management: Understanding, evaluating, and implementing effective risk management. London, NY, NY: Kogan Page.
_________________________________________________________________________________________________
Hopkins discusses the MADE2 model – Mandatory, Assurance, Decision-making and Effective and efficient core processes.
Risk management is too often treated as a compliance issue that can be solved by drawing up lots of rules and making sure that all employees follow them. Many such rules, of course, are sensible and do reduce some risks that could severely damage a company. Risk management concepts and methodologies have been around for centuries. On the other hand, enterprise risk management (ERM) solutions are more of a recent development. Enterprise Risk Management (ERM) is the process of identifying and addressing methodically the potential events that represent risks to the achievement of strategic objectives or to opportunities to gain competitive advantage (CGMA, 2013). I think that the components of the MADE2 model do promote a broader approach to risk management/enterprise risk management approach, however efforts to improve risk-function efficiency can only draw from the standard set of productivity measures at their peril.
Mandatory ensures that an organization complies with legal and regulatory obligations, as well as customer or client requirements. In the agreement it should include identification of the employers, employees, and work covered by the enterprise. It should also include a date the nomily will expire. It should include an individual flexibility agreement. It should include consultation between employer and employee in terms of major workplace changes. Finally there should also be a procedure for settling disputes.
It is an important first step to identify who will be the users of organizational assurance. Assurance ensures that significant risks have been identified and appropriate controls put in place. Assurance provides reliable information about the achievements of risk management activity. Assurance and risk management are complementary processes.
In order to ensure that correct business decisions are taken, the organization should undertake risk management activities that provide additional structured information to assist with business Decision Making. Risk management is the process of identifying risks and planning actions to manage the risk. From there this is where decision making comes in. You must assess and prioritize in order to select the best alternatives or rank alternatives.
Transformative change is needed as organizations strive to enhance the effectiveness and relevance of their risk management functions. An enterprise-wide risk transformation can substantially improve risk management while also sustainably trimming costs. Effective risk management requires a large diversity of roles with highly specialized knowledge and technical skills. Attempts to improve risk-function efficiency, if not carefully nuanced, will invite more scrutiny.
References
CGMA. (June, 2013). Enterprise Risk Management. Retrieved from https://www.cgma.org/resources/tools/essential-tools/enterpise-risk-management.html#:~:text=Enterprise%20risk%20management%20(ERM)%20is,opportunities%20to%20gain%20competitive%20advantage.
Hopkin, P. (2017). Fundamentals of risk management: Understanding, evaluating, and implementing effective risk management. London, NY, NY: Kogan Page.
____________________________________________________________________________________________________
The last important thing is how to replay one of my classmate’s post
