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BSB51915 DIPLOMA OF LEADERSHIP AND MANAGEMENT and BSB51415 DIPLOMA OF PROJECT MANAGEMENT and BSB60915 ADVANCED DIPLOMA OF MANAGEMENT (HUMAN RESOURCES) | RISK MANAGEMENT 2_V5.31.5 Review strengths and weaknesses of existing arrangementsRisk management maturity is a useful concept which can be used to better understand the effectiveness of an organisation’s risk management practices, systems and culture. It is also valuable in assessing the capabilities of business partners in an organisation’s supply and demand chain. But what are the characteristics of an immature organisation? Research in many high-risk industries tells us that risk-immature organisations tend to be sceptical about risk management and are often characterised by a culture of success and managerial invincibility. They also tend to have inward-looking, protective and narrowly constructed boards with little independence. These boards are reluctant to ask the hard questions and are not qualified to effectively identify key risks and opportunities. They also tend to promote task-oriented cultures which consistently emphasise the importance of profits over people and other corporate goals.The result is highly geared, overly lean organisations, which have little understanding of their capacity or appetite to take risk and no spare capacity to deal with the unexpected. These organisations exist “on the edge”and make decisions without any clear boundaries. They nurture a mind-set that company size and past successes provide protection from future risks, that problems happen to others, that good management and hard work prevents problems and that the ends justify the means. People in risk-immature organisations believe that risk management is someone else’s responsibility and that they have the power to offload risks onto other parties, thereby insulating themselves from the uncertainty of their environment. For these types of organisations, risk management is considered a sign of weakness because problems are seen as a sign of managerial failure. Furthermore, there is a reluctance to re-examine existing organisational practices in the aftermath of a problem and learn lessons for the future. Instead, the priority is to maintain the organisation’s public image and to ensure that internal operations remain intact.In summary, the risk management systems of immature organisations represent little more than a managerial facade to impress external stakeholders and reassure managers that something is in place to deal with the unexpected, even though managers know that they have minimal impact on day-to-day organisational practices and attitudes.In contrast to risk-immature organisations, risk-mature organisations typically have a culture of openness, awareness and sensitivity to organisational risks and of their social and financial responsibilities to stakeholders, the general public and the wider environment.
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Logic, YOUNG RABBIT PTY, AUSTRALIAN PACIFIC COLLEGE, BSB60915 ADVANCED DIPLOMA