Private and Public Entity Risk Management - Essay Example

Private and Public Entity Risk Management al Affiliation) Chapter The texts commence in laying out the basics of risk management. First the text expound on the various categories of risk which are: personal risk which impact individuals on a personal level such as life and health issues. Then it divulges in to property risks which affect the owner but directly affect the property. Finally it expounds on liability risks which imply mainly institutional risks in their operation s example finances. I t further offers and explains clarity between material and people assets which largely assist in explaining intricacies of risk management. Key words: Risk analysis management, people asset, security liability, material asset and risk assessment. Chapter 2 The proceeding chapter of the book divulges on the risk management process (risk controls) which begin with risk classification of specific risks in a given environment. I t also explain process of vulnerability detection and formalities such as field inspection checklist and security. Key words: Check list, field inspection, threat identification, assets and losses. Introduction Risk is ever present, familiar and recurring aspect in the contemporary world, be it on personal or institutional level. Risk bears with it potential gains and fails. This calls for the effective and efficient management of risk as to occasionally leverage on potential opportunities that tag along or device well articulated measures that will mitigate and navigate through potential losses and threats. On an institutional platform risk, private enterprise entities as well as government or public sector have both adopted and integrated risk management measures in both operational and strategic activities , though at varied degrees and unique to each. In dissecting the various variables and similarities associated with both entities, actual and existing subjects will largely aide our cause: 1. Minnesota State government 2. Coca Cola Company. Public entity approach on risk management Like many of it is counter-parts the Minnesota state government has largely ignored the vital role played by risk management in achieving both operational and strategic objectives. The trend was simultaneously aped by also other state affiliated entities such as quasi-government owned corporations and also city councils entities have embraced risk management. Less than 44% of aggregate public Only in recent times there has been an almost immediate and appreciation of risk management knowhow. Formerly traces of public entities embracing aspects of risk management were only evident in the national health insurance policies (personal risk) for their citizens. Recent times have seen public entities aware of other forms of risk currently and previously adopted by their private sector allies such as: Strategic risk. Enabling government entities to manage current and future threat while leveraging on opportunities embedded in their strategic goals and objectives Operational risk. Associated with the day to day running of government institutions such as efficiency and integration in core departments such as procurement, auditing and compliance. Reputational risk. Like in the private sector goodwill is highly valued, any damage to the state reputation will lead to significant decrease to net valuation of the entity. The causes have been more vital through the emergence of social media where information is transferred by the click of a button. Data risks. In the highly digital governance and administration in recent times, data safety and technology are the most critical aspects in meeting operational and strategic goals. Risks such as obsellency, data theft and corruption may prove detrimental. Financial risks. Financial risks can be further expounded into market risks that include currency fluctuations, market breakdown and margin abnormalities (rising costs and diminishing prices) and fraud mainly disloyal and compromised employee behavior. Other categories of risks may include compliance risks and budgetary and fiscal risks. The impact of risk management has largely impacted the IT department and procurement department in government entities (Enterprise Risk Management in the Public Sector, 2015) Role of risk management in public procurement The adoption of risk management has been a revelation in public procurement this is mainly due to its hand in reducing costs and wastages brought about by the shrinking budget and increased transparency in government. Risk management has give rise to supplier and supplies portfolio management and segmentation. Risk management plays an integral role in demand management, quality control and contract and supplier management. Risk analysis tools and formula have been devised so as to aid in making well informed decisions. Such tools is the risk level calculation where risks is translated as function probability and consequence thus risk level =probability (%)*consequences (of varying scales 1-100). Moreover tools such as the risk assessment grid have been invented. Impact /Effect Low High Low A C High B D Roles of risk management in IT The use of spreadsheets and data bases have greatly aided the risk management cause where previously vulnerable data is more secure but not so important as the Governance , Risk and , Compliance software which integrates and manages IT operations that are subject to regulation. It enables the use of single framework to monitor and enforce rules and procedures. The software integrates information systems of myriads of departments such as business and security thus reducing work load in managers and save limited time and resources available. It also provides data analysis tools and tracking organizational compliance measures. Though the gigantic steps that have been taken to assimilate risk management in the public sector the discipline nevertheless faces certain obstacles in realizing its full potential such as: Lack of executive buy in. government entities which have embraced risk management have less than 5 full time employees thus having a deficiency in related talents and personnel Lack of federal directive: deficiencies in political capital ,mandate policies from office of management and budget circular The intentions are hindered by the lack of a business case justifying the allocation of scarce resources and time in setting up of risk management structures Centralized or siloed decision making have also hindered the set up of risk management platforms. Most public entities perceive risk management as a knee jerk reaction process where until they are engulfed into crisis they do not see the need and importance to embrace risk management. Conclusion Through the years public sector organizations have learnt to embrace risk management as they have learnt through the past it is easier to manage a risk than to manage a crisis thus the recent improved trend (Rouse). Private entity approach on risk management Private sector risk management has been on an upward trend and very vibrant through the myriads of years in existence. This is mainly through strong and solid structures laid by professional bodies such as Institutes of Research Management, Chartered Institute of Auditors and the private sector itself. Although private entities are solely focused on bottom line profits, the coca cola company have ineptly analyzed all categories of risk management such as personal risks through life and medical insurance, property risks (general insurance) and liability risks.. Through private sector vibrant risk management infrastructure risk analysis techniques are able to be devised and levels of risks latter assessed . The roles of management in risk have also been clearly defined as : Vulnerability detection Threat identification Risk measures drafted. Conclusion The private sector has played an unparalleled and unrivaled role in ensuring growth of the industry as a whole. They have acted as flagships and pilot projects to the public entities in realizing organizational goals and objectives. Unlike their public sector counterparts private entities have set up sustainable risk management policies focusing on the process and means to the ends (Enterprise Risk Management in the Public Sector). Introduction Risk & Vulnerability and Threat identification. In Risk Analysis and the Security Survey (Broder &Tucker,2012) has provided a more than reliable blue print in providing sustainable directive in risk assessment and identification. Conclusion Through the rigorous studies it is deduced that rick management should be embraced holistically and by all industry players to derive sensible benefits. Critical structures, policies and infrastructures should be laid so as to achieve both operational and strategic efficiency and effectiveness in risk management. References Broder, J., & Tucker, E. (2012). Risk & Vulnerability and Threat identification. In Risk Analysis and the Security Survey (Fourth ed., pp. 3-20). Waltham, Massachusetts: Butterworth-Heinemann.k Enterprise Risk Management in the Public Sector. (2015). Pwc, 24-24. Retrieved October 29, 2015, from https://www.pwc.se/sv/offentlig-sektor/assets/enterprise-risk-management-in-the-public-sector.pdf Risk Management Practices in the Public and Private Sector: Executive Summary. (2010). Homeland Security, 1-9. Retrieved October 29, 2015, from http://fcemhs.com/Portals/0/Planning/Documents/risk_mgt_practices.pdf Rouse, M. (n.d.). GRC (governance, risk management and compliance) software definition. Retrieved October 29, 2015, from http://searchcio.techtarget.com/definition/GRC-governance-risk-management-and-compliance-software State and Local Governments. (n.d.). Retrieved October 29, 2015, from http://www.ushistory.org/gov/12.asp Read More