Question

Explain the issues that organizations may wish to consider when assessing their priorities and the requirements of a financial risk management program.

Answer 1

As the starting point, the definition of Critical Success Factors (CSFs) are introduced by Rochart

.He defines Critical Success Factors as “The limited number of areas in which

results, if they are satisfactory, will ensure successful competitive performance for the

organization. They are the few key areas where things must go right for the business to flourish.

If results in these areas are not adequate, the organization’s efforts for the periods will be less

than desired”. Boynton and Zmud discuss CSF methodology, define CSFs and review a

range of uses of the CSF method in the first part of their article. They regard Critical Success

Factors as one of the few things that ensures success for an organization. Critical success factors

are maintaining a high performance for an organization’s currently operating activities and its

future.

Moreover, Freund explained the CSFs concept as the most important for overall

organizational objectives, mission and strategies. Critical Success Factors which are appropriate

to each unit of business and overall organization aim to fulfill the organization’s objectives. A

great number of factors are extremely difficult to focus on and therefore only five to ten should

be indicated.

The following review of Critical Success Factors will discuss Critical Success Factors for

effective risk management. There are a number of papers on Critical Success Factors

contributing to risk management. Grabowski and Roberts (1999) examine the problem of risk

mitigation and suggest a process designed to support the high level of performance in an

organization. They identify the four important factors as:

1. Organizational Structuring and Design

2. Communication

3. Organizational Culture

4. Trust

Galorath (2006) focuses on the importance of risk management, the essence of risk management

and assesses the processes to implement risk management. He argues that risk management

requires five activities, which are as follows:

1. Top-level management support

2. An integral part of the entire program management structure and processes

3. The participation of everyone involved

4. Cultural imperative

5. A pattern of measurement