2. Organisational structure & Governance Flashcards
What are the 3 types of organisational structures?
- functional
- divisional
- matrix
What is a functional structure?
-divides the business into specialised functions
-group together expertise = more efficient
What is a divisional structure?
-number of different teams that each focus on an individual product, service or locations
-the division will have the resources it needs
-director usually at the top
-more autonomous
What is matrix structure?
-as well as working in their own departments, they will also work across teams and projects
What will the span of control vary on?
-the size of organisation
-type of work that individuals do
-the location of staff
What is a tall organisational structure?
-organised by function
-clear reporting lines
-manager has a narrow span of control
-decisions take longer
What is a flat organisational structure?
-wider span of control
-decisions can be made more efficiently
-staff ‘stagnate’ in their roles as their are few chances to move up
What is governance?
-a system that provides a framework for managing organisations
-identifies who makes decisions
-who it accountable for how an organisation behaves
What does ‘good governance’ mean?
-will have delegated authority for decision making to appropriate people
-will have a structure in place to support this
-will have controls to ensure an individual cannot go beyond their scope of authority
What does ‘good governance’ enable?
-enables board of directors and management to run a business legally, ethically and successfully for the benefit of all stakeholders
What is corporate governance?
-they must have systems in place to direct and control the way in which the business is operated
-includes setting strategic aims and objectives
Who is responsible for the governance of a business?
-the board of directors
-who are appointed by the shareholders
What is financial governance?
-how the business collects, manages and controls financial information
-allows you to monitor the operation of the business and identify where there may be financial risk
What is legal governance?
-must ensures that it complies with the necessary legislation and regulation
-implementing appropriate levels of authorisation with internal documented processes that must be followed
What is centralised control?
-means that decision making rests with the higher tiers of management
What is decentralised control?
-authority for making decisions is given to lower levels of management in the business
What is an advantage of decentralised?
-senior management can focus on key decisions and leave the day to day tasks to the team
What is a disadvantage of decentralised?
-lower level management may not have necessary skills to make ‘good decisions’
-make focus it on the team rather than the business
What is strategic or corporate level?
-at the top
-where decisions are made that affect the whole organisation
-long term
What is managerial level?
-decisions relate to the way that the business should go about achieving its goals
What is operational level?
-tend to be shorter term and relate to the practical day to day operations of the business
What is risk?
-the possibility of something happening that has not been planned
What is uncertainty?
-refers to situations where the decision maker either doesn’t know the possible outcomes and/or the probability that they will occur
What is business risk?
-a business’s vulnerability to factors that could decrease profits or cause the business to fail
What are the types of risks?
- strategic
- financial
- operational
- cyber
- reputational
What are strategic risks?
-arise from the decisions the directors of the business make about the business’s objectives or strategies
What are financial risks?
-comes from change in the financial conditions in which it operates
-change in interest rates
Examples of financial risks
- interest rates
- loans
- offering credit terms to customers
What are operational risks?
-arises from the way in which it operates its business functions
-risk arising from people and processes
What are the 5 types of operational risks?
- process
- people
- system
- legal and regulatory
- event
What is process risk?
-there will be risks of loss inherent to the processes of a business
What is people risk?
-risk arises from issues caused by the people who work for an organisation
What is systems risk?
-increased risks that the systems could be used to process fraudulent transactions
What is legal and regulatory risk?
-risk of loss resulting from an organisation failing to comply with legislation
What is event risk?
-may be present due to an external factor or event that affects the business
What are the causes of event risks?
- physical
- social
- political
- economic
What are cyber risks?
-associated with financial loss, disruption or damage to an organisations reputation
What are 8 examples of cyber risks?
- phishing
- malware
- ransomware
- distributed denial of service attack
- spyware
- keylogging
- password attack
- browser hijacking
What is a reputational risk?
-threatens the name
-can result from direct actions, third parties
How can you avoid reputational risk?
-have good codes of conduct
-strong governance
-transparent in all dealings
-socially and environmentally conscious
How can you manage risk?
-TARA
Transfer
Avoid
Reduce
Accept
What is malware?
-software inserted into computers when attachments are opened
What is ransomware?
-locks a user out of their own information systems
What is distributed denial of service attack (DDoS)?
-bombards an organisations central server with huge number of data requests at the same time
What is spyware?
-allows the attacker to spy on operations without being seen
What is keylogging?
-records every keystroke made the users of the system
What is a password attack?
-hacker tries to steal a password
-rely on easy to guess passwords
What is browser hijacking?
-hacker will change the default homepage or search engine
-feeds the user with popups to steal info
