Fundamentals of Risk Management

5. Results of operations
Impact or
attach

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Risk strategy
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types of business processes
An organization will have existing business processes and these may be satisfactory 
for generating the required income and controlling costs so that the business objec-
tives are delivered. To ensure that risk management has an adequate input into the 
delivery of business objectives, the objectives must relate to routine operations within 
the organization. However, it is not unusual for organizations to fail to establish 
business-as-usual objectives. Most objectives tend to be annualized change objec-
tives that relate to the delivery of the strategic plan for the organization. In summary, 
for risk management to make a full contribution to the success of an organization, 
objectives need to be fully established that cover strategy, tactics and operations.
A core process is one that is fundamental to the continued success (or even existence) 
of the organization. Core processes ensure that the organization is able to achieve the 
mission and corporate objectives and fulfil stakeholder expectations. Each core process 
creates value and is designed to deliver one or more of the stakeholder expectations.
There are four basic types of core process. These are processes designed, imple-
mented and managed to ensure the following:
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development and delivery of strategy;
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management of tactics, projects and enhancements;
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continuity and monitoring of routine operations;
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activities that are designed to ensure compliance.
An activity is an individual job or task that builds into the processes that deliver 
stakeholder expectations. The processes themselves are designed and intended to add 
value to the organization, but the addition of extra activities will add cost. Therefore, 
the challenge is to develop effective core processes that are also efficient.
Having identified stakeholder expectations, core processes can then be put in 
place to ensure that these expectations are delivered to the level that the organization 
has decided is appropriate. No organization will be in a position to fully deliver all 
expectations to the level desired by all stakeholders. Often, this is because different 
stakeholder expectations are contradictory.
Weaknesses or gaps in the core processes of the organization are likely to be
present, as follows:
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There may be weaknesses related to the development and delivery of strategy. 
These weaknesses will result in the organization failing to retain its position 
as a market leader. They give rise to a leadership gap.
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There may be weaknesses related to the management of tactics, including 
projects and product or service enhancements. These weaknesses will result in 
failure to keep up with competitors. They give rise to a competition gap.
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There may be weaknesses related to failure to ensure efficiency, continuity 
and monitoring of routine operations. These weaknesses will result in failure 
to maintain efficient operations. They give rise to an efficiency gap.
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There may be weaknesses related to the activities designed to fulfil mandatory 
requirements placed on the organization. These weaknesses will result in 
failure to maintain reputation. They give rise to a compliance gap.

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