Ch. 3: Risk in an Organization Flashcards
The start of the ERM process should involve assessing the ____ and ___ environments
Internal; external
As the organization grows, it may benefit from risk ___, each with a risk ____
Risk centers; risk owner
Risk owner responsibilities
Identify, assess, treat, monitor
True or false: not all risk owners are internal
True; some may be external
Org culture is defined by its shared
Values, beliefs, and accepted behaviors
What influences an org’s attitude toward risk?
Culture
How do social responsibilities differ from org governance
Governance involves legal and regulatory parameters, not just org beliefs
Code of ethics
minimum standards of expected behavior
What is a disadvantage of formal communication channels>
Messages could be delayed or become distorted
What is a disadvantage of informal communication channels?
The message may need to be verified for accuracy
Three management styles (DDS)
- Directive
- Delegating
- Supportive
Three risk attitudes
- Risk seeking
- Risk avoiding
- Risk optimizing
Risk seeking attitude
Risk naive; believe risk-taking will reap significant rewards worth the risk
Risk avoiding attitude
Risk obsessed; focus on the negative side of risks
Risk optimizing attitude
Risk managed; balanced risk attitude; assess risks based on the vision, mission, and values of the company
Hierarchy - culture
Decision-making authority is well defined
Market - culture
Org is primarily concerned with outward relationships
Clan - culture
Org is seen as a family; teamwork
Adhocracy - culture
Adaptability is key; authority is decentralized and moves as needed
Benefits of risk centers (3)
- Involvement of operational managers
- Focuses risk analysis on the org’s strategic goals
- Risk managed at the appropriate level
Risk center
Discrete unit within the organization, having a leader and specific objectives, at which level a particular risk is most appropriately and effectively managed
Which of the following would be considered an internal stakeholder?
- Stockholders
- Unions
- Suppliers
- General public
Stockholders
