MODULE 2

Integrated Risk Management

This module aims to develop students’ knowledge and skills in integrating Risk Management across the whole organisation.
More specifically, this module explores the link between developing an effective organisational framework for the management of risk and on organisation’s strategic planning, aims and management.

Module 2: Integrated Risk Management is divided into eight sections:

Section 1: Integrating Risk Management

This section highlights the need for integrated management and explores its relationship with risk management.

Learning outcomes:
Upon completing this section, the student should be able to:

  • Recall some ways modern organizations can compete more effectively in the marketplace
  • Describe the disadvantages of a silo-based approach to risk management
  • Define integrated risk management
  • State some of the drivers behind organizations beginning to integrate the management of risk
  • Describe the benefits of integrated risk management
  • Describe the aim of integration
  • Describe the role of good corporate governance
  • Identify the relationship between corporate governance and effective management
  • Recall some of the Australian Securities Exchange’s (ASX’s) principles of good corporate governance
  • Define the purpose of the corporate governance framework
  • Categorize organizational activities according to the three levels of formalization in risk management
  • Distinguish between formal and informal risk management

Section 2: Management Theory and Function

This section discusses the importance of leaders and managers tasked with championing integrated risk management across the management system.

Learning outcomes:
Upon completing this section, the student should be able to:

  • Distinguish between traditional and modern management models
  • State the traditional and revised definitions of effective management
  • Distinguish between the role of operational and strategic management
  • State the primary role of management
  • Describe systems theory and contingency theory
  • Recall the formula for organizational survival
  • Distinguish between leadership and management
  • Describe the purpose and responsibilities of a frontline or line manager

Section 3: Strategic Management

This section describes the importance of strategic management in helping to steer the organization along a path of growth and success. The section explains 1) the importance of strategic planning in achieving effective management, 2) the role of risk management at the strategic level, 3) how to integrate risk management within the strategic planning and management process and 4) the development of a robust risk management framework.

Learning outcomes:
Upon completing this section, the student should be able to:

  • Outline the management process
  • Recall the four functional components of the management process, including their purpose
  • Order the five key stages in the planning process
  • Describe the five functional elements of organizing
    Identify additional factors which influence leadership in the management process
  • Define a risk management implementation plan
  • Describe how organizations can map the implementation of the risk management implementation plan against the four functional components of the management process.

Section 4: The Management Process

This section explores the practical applications of management principles, philosophies and processes. It also describes the application of the management process in the management of risk. Finally, this section describes the application of the management process in the management of risk, including establishing 1) a risk management plan, 2) a risk management implementation plan, and 3) an integrated risk management framework.

Learning outcomes:
Upon completing this section, the student should be able to:

  • Outline the management process
  • Recall the four functional components of the management process, including their purpose
  • Order the five key stages in the planning process
  • Describe the five functional elements of organizing
  • Identify additional factors which influence leadership in the management process
  • Define a risk management implementation plan
  • Describe how organizations can map the implementation of the risk management implementation plan against the four functional components of the management process.

Section 5: Decision-Making

This section explores the importance of decision-making and describes the principles underpinning each decision type. It also explores the role of decision-making as a key component in the risk management process. Finally, this section describes how senior management determines the level of the organization which should make decisions about the management of particular risks.

Learning outcomes:
Upon completing this section, the student should be able to:

  • State the three key components of opportunity-based risk management
  • Describe the three benefits of taking opportunity-based risks
  • Define decision-making
  • Describe the three main problem categories for which organizations need to make decisions
  • Describe the two main categories for managerial decisions
  • Describe the three conditions under which managers make decisions
  • Describe the rational and cognitive approaches to decision-making
  • Describe the four stages of the rational decision-making process
  • Explain the relationship between risk and decision-making
  • Identify the direct linkages between the decision-making process and the stages in the risk management process
  • Recall some of the specific tools organizations can use to further enhance the effectiveness of their decisions
  • Explain the importance of establishing levels of accountability for decision-making

Section 6: Organizational Structure and Communication

This section examines the principles involved in work organisation, including the relative benefits of simple, complex and matrix structures. The section also describes issues concerned with communication within organisations. Finally, this section examines different organisational approaches to developing risk management implementation plans.

Learning outcomes:
Upon completing this section, the student should be able to:

  • Define an organisational structure
  • Describe the key drivers of the organisational structure
  • Distinguish between simple, complex and matrix organisational structures
  • Define communication
  • Describe the three directions of communication of information as a result of integrated management systems
  • Describe the importance of ensuring information management systems are designed to share information across the organisation
  • Describe the communication benefits of the matrix organisational structure
  • Describe the formal and informal categories of the communication network
  • Describe the benefits of recording workplace information in relation to the risk management process
  • Recall some of the workplace information aspects organisations should record
  • Discuss the effect of organisational structure on the implementation of a risk management implementation plan
  • Describe how communication channels facilitate effective risk management.

Section 7: Management Reporting

This section describes the importance of management reporting with respect to the upward communication of information, including the purpose and benefits of reporting from a business and legal perspective. This section also addresses the what, why, when and how of reporting on risk management strategies.

Learning outcomes:
Upon completing this section, the student should be able to:

  • Define a report
  • Describe the importance of reporting in the management process
  • Describe the main functions of management reports
  • Describe the manager’s dual analytical roles in relation to the management report
  • State the four characteristics of useful information
  • Describe the role of the manager in analyzing a management report
  • Describe the importance of a risk reporting framework
  • Recall a few potential sources of risk reporting.

Section 8: Stakeholder Management

This section examines the process involved in identifying and monitoring stakeholders and key stakeholders relationships. The section also provides guidelines for establishing service structures for stakeholder relationship, with a view to achieving organisational goals.

Learning outcomes:
Upon completing this section, the student should be able to:

  • Define a stakeholder
  • Describe the importance of stakeholder management
  • Describe stakeholder engagement
  • Recall the benefits of effective stakeholder management
  • Recall the three types of stakeholder groups
  • State the purposes of a stakeholder analysis
  • Describe stakeholder groupings based on a stakeholder’s information
  • contribution and resistance to change
  • Describe the importance of stakeholder map.