Question

Explain how the risk management framework relates to processes:

• Lead and establish accountability
• Align and integrate
• Allocate resources
• Communicate and report

Answer 1

Risk management is the process of identifying and analyzing the risk factors in successful execution  of a project and ranking them as per the degree of risk and taking proper steps in order to mitigate the risks.

1)While assessing the company's risk management model and framework it must be ensured everyone knows who's responsible for addressing risks in each part of the organization.All leaders must understand the risks in the businesses for which they're accountable and risk professionals must support employees and managers in risk mitigation. when everyone becomes aware of their accountability performance becomes serious automatically and every one will be liable to discharge their responsibility properly. For this divisional or business line wise segregation in the overall organisation is necessary.Thus risk management promotes accountability in organisation.

2)Since for risk management processes various division and groups formed within same organisation,in order to discharge the overall function and for maintaining the organisation's unique moto several group must be integrated and aligned.Mangers must establish common compliance standards,procedures so that evaluation of every department's performance must be done by following an uniform basis.Thus risk management promotes alignment and integrity in organisation.

3)Risk management framework assesses several risks according to their significance and ranks them as per their severity.Thus allocation of resources is made to the most significant areas first and then in the less risky sectors.Thus proper allocation of resources can be done and also optimum utilization of scarce resources can be done. In this way risks can be tried to be mitigated into a tolerable level.

4)While establishing accountability,the responsible person is liable to report his head for any discrepancies that can increase risks for organizations and the head will immediately take action and manage so that the discrepancies do no result into severe risks.In risk reporting mechanism primarily these are reported- the event that has the potentiality of converting into risk in near future,current status of the risk profile,current risk exposure and emerging & future risks etc.The reporting may be on face to face basis or through internal reporting channels.So risk management framework also relates to the Communication and report processes.