Analysis of the composition of emerging enterprise risk management practice in the context of managing operational risks in the fast changing business world

Moeti, Phokoile Daniel (2004-12)

Thesis (MBA)--Stellenbosch University, 2004.

Some digitised pages may appear illegible due to the condition of the original hard copy

Thesis

ENGLISH ABSTRACT: The complexity of modern business requires that all managers be, at least, partially responsible for strategic risk management. Therefore, all managers must have an awareness of the business direction of the organisation as a whole; that is, the corporate and business strategy. Companies embark on this journey to ensure their future existence. In this regard, having a risk management strategy allows a company to visualise and aim for its future, because such strategy guides decisions on the allocation of resources throughout the organisation. The risk management strategy encapsulates both desired goals and beliefs about what are acceptable and, most critically, unacceptable means of achieving them. To achieve the above, the ineptitude of traditional risk management strategy rarely seems to dictate unique structural solutions. Rather, the crucial factors in the operational risks processes are most often those of execution and continuous adaptation; of getting things done, and staying flexible. In addition, and to a very large extent, this means going far beyond strategy, to issues of organising structure, people, and the like. Given the historical development arising from the academic and insurance background and its inefficacy in dealing with the array of risks in the fast changing business environment, it is therefore important that risk management be embedded in every aspect of the management structure in an organisation for it to deal holistically with all risks facing it. The major challenge, however, is how to free risk management from the specialist "silos" of academia and insurance that have hindered its growth since inception. The approach of this research study is motivated by a desire to address this challenge. To do so, it employs two scientific research methods, first, to provide basic knowledge of concepts in view of expanding the existing basic knowledge and contribute to the literature of risk management at large by describing its evolution into a modern risk management now known as enterprise risk management, and, second, to use the applied research method in focusing on the specific problem of knowing how to translate theoretical aspects of risks management into business solutions within the context of managing operational risks. This is done by illustration using South African Airways as a Case Study. In view of the above, the aim of this research study is to show how practically to liberate risk management from the clutches of academia and insurance and to give risk management strategic significance at senior management level and tactical significance at operational level within the aforementioned modern technique of enterprise risk management.

AFRIKAANSE OPSOMMING: Die ingewikkeldheid van moderne besigheid vereis dat alle bestuurders ten minste gedeeltelik vir strategiese risikobestuur verantwoordelik is. Daarom moet alle bestuurders bewus wees van die besigheidsrigting van die organisasie as geheel; dit is, die korporatiewe en besigheidstrategie. Maatskappye pak dié reis aan om hul bestaan in die toekoms te verseker. 'n Risikobestuurstrategie stel 'n maatskappy in staat om die toekoms te visualiseer en daarheen te mik, want dié strategie lei besluite oor die toekenning van hulpbronne regdeur die maatskappy. Die risikobestuurstrategie behels die verlangde doelwitte, en die oortuigings van wat aanvaarbaar en wat, uiters belangrik, onaanvaarbaar is om die doelwitte te bereik. Om die bogenoemde te bereik wil dit voorkom of die ongepastheid van tradisionele risikobestuurstrategieë selde unieke strukturele oplossings voorskryf. Die beslissende faktore in bedryfsrisiko-prosesse is gewoonlik uitvoering en voortdurende aanpassing; om dinge te laat gebeur en buigsaam te bly. Daarmee saam, en tot 'n baie groot mate, beteken dit om verby die strategie te beweeg na aangeleenthede van struktuur, mense en dies meer. Gegewe die historiese ontwikkeling van die akademiese en versekeringsagtergrond en die onvermoë om 'n verskeidenheid risiko's in 'n vinnig veranderende sake-omgewing te hanteer, is dit belangrik dat riskobestuur in elke aspek van die bestuurstruktuur van 'n organisasie vervat word. Dit sal verseker dat die organisasie dreigende risiko's holisties benader. Die grootste uitdaging is egter hoe om risikobestuur los te maak van die "spesialissilas" van die akademie en versekering, wat die groei daarvan sedert sy ontstaan belemmer het. Die benadering van dié navorsingstudie word gemotiveer deur 'n behoefte om dié uitdaging aan te pak. Om dit te doen, word twee wetenskaplike navorsingsmetodes gebruik. Eerstens, om basiese kennis te verskaf oor konsepte om die bestaande basiese kennis uit te brei en by te dra tot die literatuur van risikobestuur. Dit word gedoen deur die evolusie hiervan tot moderne risikobestuur, nou bekend as ondernemingsrisikobestuur, te beskryf. Tweedens, om die toegepaste navorsingsmetode te gebruik om te fokus op die spesifieke probleem van hoe om teoretiese aspekte van risikobestuur oor te skakel na besigheidsoplossings in die konteks van die bestuur van bedryfsrisiko's. Dit word gedoen deur die Suid-Afrikaanse Lugdiens as gevallestudie te gebruik. In die lig van die bogenoemde, is die doelwit van dié navorsingstudie tweeledig. Eerstens, om aan te toon hoe om risikobestuur te bevry van die kloue van die akademie en versekering. Tweedens, om die belangrikheid van strategiese risikobestuur op senior bestuursvlak en taktiese risikobestuur op bedryfsvlak uit te lig binne die voorgenoemde moderne tegniek van ondernemingsrisikobestuur.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/49831
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