Chapter 2 - The Risk Management Network Flashcards
Risk Management Involvement
- Compliance - Goal: Legal Operations; Examples include Legal, Regulatory, Audit & Contracts
- Operational - Goal: Safety and Stability; Examples include Health and Safety, Environmental, Insurance & Business Continuity.
- Strategic - Goal: Capitalize on opportunity and mitigate threats; Examples include Expansion Plans, Product Development, Due Diligience, Corporate Goal Achievement, Reputational Management, Growth.
Risk Managers need a network of connections and people because they need to access information and expertise they don’t have. Additional resources may be required when
1.An outside or objective viewpoint is required.
2.Time is of the essence
3. An outside expert is more cost effective
4. Upper management requests it.
5. A limited term activity or special project arises.
Member of a Network
- Formal groups vs. informal connections (internal, external, etc.)
- Expertise including, but not limited to: Risk Management, Health, Safety and Environmental, HR, Functional areas of the organization, legal, agents, brokers, carriers, captive managers, RMIS providers & Actuaries
How to identify the best fit for network members
- Background
- Roles and Responsibilities
- Soft Skills, including working effectively with others
- Time availability.
4 Step Communication process
Step 1: Encoding/Creation
1. Is this a message that needs to be delivered?
2. Content of the message:
- What information should be provided and at what point in time.
- How much detail is needed?
- Does the receiver have enough context to understand the message? Or do you need to provide information such as background, setting or framework for additional understanding?
Step 2: Transmission
1. Is there a time frame for transmitting the message
2. What is the appropriate medium to convey the information?
3. Face-to-face, phone call, email, formal written document
4. Written communication creates a more permanent means of sharing information that allows the writer to more carefully consider content and tone.
Step 3: Reception / Decoding
1. The receiver will interpret the message for understanding and expectations.
2. The receiver’s response will be determined by his or her understanding. Were you clear in your communication to influence the understanding you wanted?
3. The expectation is that the message was communicated efficiently and effectively.
Step 4: Feedback/Response
1. Message back to sender
2. Action Taken
3. Question or request for clarification.
Types of communication channels
Linear Channels
Interactional Channels
Transactional Channels
Linear Channel
One way communication where there is no feedback expected from the receiver; typically used for mass communication, hard to gauge effectiveness; examples: directions to subordinates, policy and procedure manuals, organizational notifications, advertisements, signage.
Interactional Channels
2 linear models stacked on top of one another, where communication includes feedback; typically found in modern communication methods such as email, instant messaging or texting. Examples include: discussion boards, social media sites, interactive marketing.
Transactional Channels
Communication where the roles between sender and receiver are interchangeable; typically used for interpersonal communication like a phone call, face-to-face interaction or video chat. Examples include: advice, problem-solving discussions or activity coordination.
Communication Networks
Chain Network - individuals linked through common activity or purpose
Y Network - individuals linked through a hierarchy or span of control
Circle network - peer communication
Wheel network - one individual who receives and disseminates information to others such as in a crisis communication network with one spokesperson.
All-Channel Networking - Network of Linked Networks.
What is mission critical?
Factors such as equipment, processes, personnel, utilities that are essential to the survival of business operations; failure of one of these can seriously damage business operations. Examples: online banking, electricity, computer systems. Could shut down business completely.
What is business critical?
Factors that make operating difficult or inconvenient and could create serious financial or legal consequences. Examples include email systems, automation processes, computer programs. Lower level headaches.
How determine what is most important to a business.
- What is mission critical?
- What is business critical?
- What is mission/business critical to each functional department?
- What are the interdependencies between functional departments?
- What is the risk tolerance for each critical element?
- What are the impacts of critical exposures on individual departments as well as the organization as a whole?
Communication coming from risk management will have a broad audience with varied interests. Possible stakeholders:
Employees, Managers, C-suite, Board of Directors, Investors and stock exchange entities, clients/consumers, agents/brokers, underwriters and other key vendors such as third-party administrators (TPAs) and RMIS, regulatory and other authorities.
Risk Management Program Information
- Mission statements and core values for both the organization and risk management department, including risk tolerance philosophy
- Loss control and claims management updates
- Insurance trends and projections projects and initiatives
- Summaries from external support teams (TPAs, RMIS and agency services such as loss control, engineering, etc.)
