Introduction
Alarmed by catastrophic losses in the industry, many organizations are re-evaluating their different managerial assessment and programs. Operational failures are one of the results from management issues.
Managing risks requires a new approach and control the weaknesses and improve process efficiencies. When a management gets too focused directly on the broad issue like the management risk, they can definitely employs methods such as risk-based pricing and risk-adjusted performance measures. Risk is a big issue within the management and excessive risk exposure can quickly lead to major losses.
Understanding the Risk Issues
Organizations have been conducting risk assessments for decades but still there are many things or issues that the management needs to recognize and control. In the absence of controls, the risk can be a trigger to a greater danger. Understanding the issues is another way to address the developing control management assessment (Khan and Shimpi, 2008). The under-control and the over-control should not be tolerated for it will also result in another risk.
Management Risk
Management risk may come into different forms. And there are ten most operational and management risks that a firm might encounter some of them (Garcia, et al., 2005).
- The Consolidation or Achieving Strategic Balance is a kind of risk that is present among merged companies and support form domestic banks.
- Retail or Bonding with Customers is another type of risk that is difficult to handle. It is because, some firms may find it hard to adopt the consumer behavior and use it as their model. Some of them are providing high-quality but they don't get an equal return.
- The Talent Management is about the skills of the employees and how they can incorporate it with other employees or pass it to the next generation of employees.
- The decision making is another factor that can be considered as a risk or might trigger to another risk. The decisions such as off-shoring or cutting down the cost is a complex decision that may affect the whole organization, its culture, and its philosophies.
- The Demands on the Finance Functions may not meet the requirements and can be another form of organization's loss (Spencer and Sims, 1995).
- The Increased Debt of the organization might not be monitored and the bankruptcy is the end of all the management efforts if it is not given prioritize or controlled.
- The Corporate Governance is sometimes not applicable in other companies where the regulators, board of directors, or the stakeholders are the one responsible in meeting the overall expectations. The expanded responsibilities are too much to handle and it can be worse if there is no effectiveness in a leadership procedure (Khan and Shimpi, 2008).
- The Technological aspect of a company that can cause organizational change is another type of risk that may seem small but generally cause management conflicts.
- The Human Resource issue is the last risk for which the people are the key to acquire success. But without the standard and strategic recruiting, training, and employment the company will find its own disaster. Joining this issue is the ethical or corporate misconduct that human resource staff may consider as a management burden (Spencer and Sims, 1995).
- The Weak Connections of the employees towards the company goals and vision can also weaken the productivity, competitiveness, and efficiency of key people.
Conclusion and Recommendations
When there is a presence of a Management Risk, an organization must therefore first look on assessing the risk and how it will affect or what is the impact toward the firm. Risk, as presented, can be simple or much more like ordinary for other firm but risk is a risk. Management should rely on their historical background and learn from it. Another strategy to lessen the risk is the traditional research and development for it will serve as a concrete basis on whatever decision that they create.
For over the years, many organizations or firms dedicated their time and effort to deliver their products or services on their consumers and suddenly announced for closure. This will not happen if the organization acknowledged the existence of different kind of management risk for it is like a symptom and an organization is the human body. There should be an available cure whenever the signs of sickness occur.
References:
Garcia, J., (Ed) et. al., 2005. Global Banking Industry Outlook. Financial Services. [Online] Available at: http://www.deloitte.com/dtt/cda/doc/content/2005%20Top%2010%20issue%20for%20banking%20industry.pdf. [Accessed 04 Nov 2009].
Khan, A., & Shimpi, P., 2008. Modern Operational Risk Management. OpRisk Advisory. [Online] Available at: http://www.towersperrin.com/tp/getwebcachedoc?webc=TILL/CAN/2008/200804/Invite_Operational_RiskToronto.pdf. [Accessed 04 Nov 2009].
Spencer, M., (Ed) & Sims, R., (Ed). 1995. Corporate Misconduct: The Legal, Societal, and Management Issues. Quorum Books, Westport, CT.
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