Proper risk management and internal control are important aspects of a company’s governance, management, and operations. Risk management focuses on identifying threats and opportunities, while internal control helps counter threats and takes advantage of opportunities.
Proper risk management strategies and internal control mechanisms assist companies in making informed decisions about the level of risk that they are willing to assume and implementing the necessary controls to effectively pursue their objectives.
Successful companies integrate effective governance structures and processes with performance-focused risk management and internal control at every level of the company and across all operations.
The purpose of this assignment is to enable the students to enhance their knowledge of the application of Enterprise Risk Management (ERM).
Consider below case study:
You have appointed a new CEO of a small start-up consultancy services company and want a clear picture of the current situation and want to decide on a future strategy for growth. You gather your team and brainstorm the ideas.
As a result of the team’s analysis, you decide that the consultancy’s main strengths lie in its agility, technical expertise, and low overheads. These allow it to offer excellent customer service to a relatively small client base. The company’s weaknesses also have to do with its size.
You will need to invest in training, to improve the skills base of the small staff. You’ll also need to focus on retention so that doesn’t lose key team members. You see opportunities in offering rapid-response, good-value services to local businesses and to local government organizations.
The company can likely be the first to market with new products and services, given that its competitors are slow adopters. The threats require the consultancy to keep up to date with changes in technology. It also needs to keep a close eye on its largest competitors, given its vulnerability to large-scale changes in its market.
To counteract this, the business needs to focus its marketing on selected industry websites, to get the greatest possible market presence on a small advertising budget.
You are expected to arrange your discussion as follows:
The purpose of this assignment is to establish the risk categories that are appropriate for your selected business in Part I, based on the application of PEST and SWOT analysis.
PEST is an analysis of the macro-environment (environmental scanning) in terms of political, economic, social, and technological factors. The SWOT analysis uses the information from the earlier analysis (PEST) to further determine the priority issues and develop strategies to address the issues. SWOT stands for Strength, Weakness, Opportunities, and Threat.
As per your discussion from Question 1, you are expected to evaluate the risks based on the below requirements: