An analysis on Risk Management and Corporate Management
Risk management and corporate management are two essential ingredients which are required by every enterprise in order to function in the most efficacious manner, to achieve its desired goals on time and to be successful in their relevant market. Risk management is defined as the process of identifying, analyzing, assessing, controlling, avoiding, minimizing or eliminating of unacceptable risks arising in business. An organization might use risk assumption, risk avoidance, risk retention, risk transfer, or any other strategy (or combination of strategies) in the right manner and proper management of events arising in future.After discussing the meaning of Risk management it is pertinent to know the meaning of Corporate Management. As per Business Dictionary, Corporate management is defined as the process of leading, administrating and directing the business of a company in a relevant market. Some of the task performed in the process of applying the concept of corporate management includes strategic planning, managing the resources of the company and to apply them in the most efficacious manner to attain the objectives set by the company.As we have discussed the meaning of risk and corporate management. Now it is relatively easier to understand an extensive analysis of both the terms.
Types of Risk Management
Risk management is utilized by the management of an enterprise as a strategic tool for the purpose of achieving the goals of an organization and climbing the ladders of success. There is various kind of risk in a business and the task of a risk management is to timely identify, then to assess the risk and handle it diligently. The type of risk management differs from one another on the basis of nature of operations, goals set up by the organization and their performance.Commercial enterprises apply a various form of risk management procedures to handle different risks because they face a variety of risks while carrying out their business operations.
There are several types of risk management which are as follows:
1.Enterprise Risk Management
It is a strategic setup of various theories which is mainly used for the check the potential risks that lead to having an adverse impact on the enterprise. These risks can be concerned with the resources, products and services or the market environment in which the enterprise operates.
2.Operational Risk Management
Risks which arise due to the execution of the business functions of the enterprise. Most Common form of risk. At primary level, operational risk management deals with technical failures and errors committed by humans like:
a. Execution Mistakes
b. System Failures
c. Policy Violations
d. Legal Infringements
e. Rule Breaches
f. Indirect and Direct additional risk taking
3.Financial Risk Management
Financial Risk Management of an enterprise aims to restrict the exposure of a firm to market and credit risk using various financial instruments. It relates to various business concepts like foreign exchange, liquidity, inflation, non-payment of clients.
4.Market Risk Management
This risk management pertains to analyze the risk arising in a particular market where the enterprise is engaged and competition arising in that particular market.
5.Credit Risk Management
This risk management relates to the probability of nonpayment of debtors. It is an essential for an enterprise to keep a track of risk of this nature.
6.Quantitative Risk Management
It relates to the process to calculate the possible risk arising for an enterprise in quantity.
7.Commodity Risk Management
Risk concerning with commodities such as price risk, political risk, quantify risk and cost risk.
8.Bank Risk Management
It relates to the different types of risk faced by the banks like market risk, credit risk, liquidity risk, legal risk, operational risk and reputational risk.
9.Non-Profit Risk Management
Risk management pertaining to services on a non-profit seeking basis.
10.Currency Risk Management
Risk relating to deals with currency changes.
11. Project Risk Management
Project associated risk.
12. Integrated Risk Management
Risk related to merging of risk data into the strategic decision-making of a company and taking decisions in short supervision of market etc.
13.Technology Risk Management
Proper management of risk relating to the implementation of new technology.
14. Software Risk Management
The risk associated with the implementation of new technology.
15. IT Risk Management
The risk associated with the implementation of information technology and certain inherent risk associated with technologies.
Risk Management ProcessRisk Management is “the systematic application of management policies, procedures, and practices to the task of establishing the context, identifying, analyzing, assessing, treating, monitoring and communicating.”
Risk Management must be applied in any university, school, business enterprises etc. Risk management is a simple process. Risk analysis is often performed in a group having a good understanding of objectives being considered.
1.Identify the Risks
2.Identify the Causes
3.Identify the Controls
4.Establish your Likelihood and Consequences Descriptors
5.Establish your Risk Rating Descriptors
6.Add other Controls
7.Make a Decision
8.Monitor and Review
Corporate ManagementCorporate management is a decision which are set up by a firm for the purpose of achieving its target and to move the business in the positive direction. It includes setting up of the budget, setting up of goals for different levels of management etc. Corporate management and corporate governance are two different concepts. Corporate governance is primarily about protecting a business whereas corporate management is more concerned about growing it.
Nature of Corporate ManagementNature of corporate management is diversified and it is done with the purpose of managing all the activities of an organization for the purpose of achieving its goals and to be efficacious in climbing the success ladder. Nature of corporate management is well explained in the following points:
1.To surround and encircle the entire management process.
2.It is concerned with the choice of alternatives, determination of the future course of action, mobilization of resources and deployment of resources for the attainment of goals.
3.It is both short and long-term.
4.It is related to all levels of management. Strategic issues, however, are related to top management.
Scope of Corporate Management
The term corporate management is a wider term which further analyzes and explains the concept of corporate planning and it includes implementation and control of various aspects of an organization. They are diversified in different areas:
1.Role of the management in corporate governance.
2.Code of conduct including audit committee, governance committee.
3.Competitive scenario for dynamic and global markets.
4.Strategic enablers like IT, R&D, knowledge management, and innovations.
5.Corporate social responsibility including ethics, values and social audit.
Types of Corporate Management styles
This type of corporate management style relates to controlling of employees by their employers. This style leads to motivation through threats and discipline.
This quality can be shown as “Firm but fair” manager. It leads all the employees towards a clear direction. It helps to motivate a person through persuasion and feedback on task performance.
This style creates harmony among employees and between management and employees. It avoids conflicts among employees. It motivates people and keeps them happy.
Implemented with the style of building commitment and consensus among employees. Each and everyone in the firm has to contribute. Encourages employees to input in decision-making.
Pacesetting style requires a high standard of excellence. The manager performs all task by himself. Motivation is done by setting high standards.
Coaching style requires the long-term professional development of employees this style of manager is a developmental manager. Motivation is achieved through opportunities through professional development.
Corporate management and Risk management are two very essential elements in a business enterprise. An enterprise in order to be a successful needs to have an efficacious department of these two. They are like two pilots of the same plane for an enterprise i.e in order to reach the right destination at the right time the two pilots must coordinate and function together same is the case in this scenario.
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# BD Dictionary, Corporate Management, www.businessdictionary.com/definition/corporate-management.html.
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# Southern Cross University, The Risk Management Process, scu.edu.au/risk_management/index.php/8/.
# Sam Ashe- Edmunds, The Difference Between Corporate Governance & Corporate Management, Chron: Hearst Newspapers, LLC.
# RHT Holding LTD, Corporate Management, www.rht.mu/products/details.php?id=42
# Ros Cardinal, 6MANAGEMENT STYLES AND WHEN BEST TO USE THEM-THE LEADERS TOOL KIT, LEADERS IN HEELS, www.leadersinheels.com/career/6-management-styles-and-when-best-to-use-thme-the-leaders-tool-kit/