Risk Management and Corporate Governance

Risk Management and Corporate Governance

Think about all the ways, both large and small, that leaders affect an organization’s culture and goals. In an example described in the magazine The Economist, Howard Schultz, CEO of Starbucks, decided that Starbucks should strive to be a “third place” in its customers’ lives, after only home and work (“The New Oases,” 2008). This directive influences all aspects of the organization, from the decoration of stores to the attitudes of employees. The governance of an organization will also affect its risk management strategies both directly and indirectly. Factors like organizational structure or culture can affect how a given organization assesses and approaches risk. In this Discussion, you will evaluate your own experiences to more fully understand the factors that determine how organizations manage risk.

Consider an organization where you work or one with which you are familiar, and think about how the culture and structure of that organization affects its approach to risk management.

With these thoughts in mind:

Answer the following:

  • Briefly describe the organizational structure (governance). This should include elements of culture, internal and external stakeholders, and the impact of the role of certain stakeholders on the organization’s risk management approach.
  • Describe the organization’s approach to risk management.
  • Describe the advantages and disadvantages of its approach.
  • Make one or more recommendations on how you would improve its approach.

References:

Kerzner, H. (2015). Project management 2.0: Leveraging tools, distribution collaboration, and metrics for project success. Hoboken, NJ: Wiley.

Chapter 7, “Project Governance” (pp. 141–151)
This chapter provides a definition of project governance and describes how project governance differs from corporate governance. Various governance frameworks are presented, along with how these influence roles, responsibilities, and decision-making authority.

Hampton, J. J. (2015). Fundamentals of enterprise risk management: How top companies assess risk, manage exposure, and seize opportunity. New York NY: American Management Association.

Chapter 2, “Enterprise Risk Management” (pp. 18–24)

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