Consequently an organisations risk culture drives the behaviors that influence

Consequently an organisations risk culture drives the

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Consequently,anorganisation’sriskculturedrivesthebehaviorsthatinfluenceday-to-daybusinesspractices,andisasignificantindicatorofwhethertheorganizationembodiesthecharacteristicsofaRiskIntelligentEnterprise25
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MONASHBUSINESSSCHOOL26The Aim of Establishing the Risk ContextThe aim of the ‘establish the context’ step is to articulate the organisation’s objectives, define the external and internal factors that could be a source of uncertainty, scope and structure the risk management activity, and finally design the criteria to subsequently assess the risk.It is therefore a necessary first step in the risk management process. It has its own five-step process to be followed.
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MONASHBUSINESSSCHOOL27The Process for Establishing the Risk Context (a Process in the Process)By establishing the context, the organisation articulates its objectives, defines the external and internal parameters to be taken into account when managing risk, and sets the scope andrisk criteria for the remaining process.By establishing the context, the organisation articulates its objectives, defines the external and internal parameters to be taken into account when managing risk, and sets the scope andrisk criteria for the remaining process.Reading: SA/SNZ HB 436:2013. Pages 50-65
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MONASHBUSINESSSCHOOL28How do you find the organisation’s objectives?In order to assess risks, objectives need to be expressed clearly and unambiguously at the beginning of the risk process.Research public information. What goals and targets does the organisation hold itself accountable to?Annual reportsOther shareholder information including corporate responsibility/sustainability reporting and investor briefingsResearch internal informationRisk management and governance policiesCommittee chartersStrategy and operational plansExisting Risk Appetite StatementsConduct internal surveys and interviews with senior management
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MONASHBUSINESSSCHOOL29ii) Identifying Stakeholders and Their ObjectivesEstablishing the context involves identifying key stakeholders and developing an understanding of their objectives and characteristics.Stakeholders are normally identified using a systematic method, within a communications plan, that employs the experience and knowledge of a small group of people (ie. Brainstorming with experts internal and external).Stakeholders help clarify objectives and also the risk criteria.INTERNALEXTERNALBoard and Senior CommitteesDivisional HeadsOperation OwnersEmployeesShareholdersDebtholdersCreditorsDepositorsSuppliersGovernmentCommunity GroupsCustomersCompetitorsMedia
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MONASHBUSINESSSCHOOL30iii) Articulate the External and Internal FactorsThe internal and external environments are described by the factors within and outside the organisation that might influence the organisation achieving its objectives.
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