Browsing by Author "Benjamin, Nicolas James"
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- ItemA systematic approach to enterprise risk management(Stellenbosch : Stellenbosch University, 2015-03) Benjamin, Nicolas James; Fourie, C. J.; Louw, Louis; Stellenbosch University. Faculty of Engineering. Dept. of Industrial Engineering.ENGLISH ABSTRACT: In the current economic climate where credit crises, fluctuating commodity prices, poor governance, rising unemployment and declining consumer spending exist, risk management is of utmost importance. Proclaiming the existence of a risk management strategy is not enough to ensure that an enterprise achieves its objectives. The implementation of a holistic enterprise-wide risk management framework is required in order to execute strategies and achieve objectives effectively and efficiently Two types of risk management have emerged in industry, namely quantitative and qualitative risk management. On the one hand, qualitative analysis of risk can be done quickly and with minimal effort. However, these methods rely on the opinion of an individual or group of individuals to analyse the risks. The process may be highly subjective and does not fully consider the characteristics of the enterprise. This renders qualitative risk analysis as an ineffective singular strategy although it has been shown to be effective when the risks are well understood. Quantitative analysis, on the other hand, is particularly effective when the risks are not well understood. These methods have been shown to provide substantially more information regarding risks compared to qualitative analysis. However, many quantitative risk management methods presented in literature are studied in isolation and not within the context of a holistic risk management process. Furthermore, quantitative methods tend to be complex in nature and require a reasonable understanding of mathematical and statistical concepts in order to be used effectively. In view of this, there is a need for an enterprise risk management framework that emphasises the use of qualitative methods when the risks are well understood and quantitative methods when in-depth analyses of the risks are required. In this study, a systematic enterprise-wide risk management framework that incorporates both quantitative and qualitative methods was developed. The framework integrates these methods in a logical and holistic manner. The quantitative methods were found be to be largely practical while the qualitative methods presented are simple and easy to understand.