Fundamentals of Risk Management

Risk culture
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The biggest difference between managers and leaders is the way they motivate the people 
who work for them and this sets the tone for most other aspects of what they do.
Managers have subordinates and have a position of authority and their subordinates work 
for them and largely do as they are told. Managers are paid to get things done and pass on 
this work-focus to their subordinates. Managers seek control and this indicates that they
are relatively risk-averse and they will seek to avoid conflict where possible.
Leaders have followers, rather than subordinates. Many organizational leaders do have 
subordinates, but only because they are also managers. When they want to lead, they give up 
formal authoritarian control. Leaders consider it natural to encounter problems that must be 
overcome. They are comfortable with risk and will see routes that others avoid as potential 
opportunities, but may break rules in order to get things done.
Leadership versus management

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Part seven
Risk governance
LEARNINg OUTcOmEs FOR PART sEvEN
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describe the key features of a corporate governance model and describe the links 
to risk management in different types of organizations;
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outline the importance of evaluating the performance of the board and board 
committees and how this relates to corporate governance;
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list the different types of stakeholders of a typical organization (CSFSRS) and 
explain their influence on risk management;
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explain the importance of stakeholder expectations and how these can be 
managed by effective dialogue and communication;
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summarize the key features of operational risk as practised in financial 
institutions, such as banks and insurance companies;
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describe the key sources of operational risk in financial institutions and provide 
examples of how these risks are managed;
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produce a brief description of the project lifecycle and the importance of risk 
management at each stage;
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describe the key features of a project risk management system, such as the 
project risk analysis and management (PRAM) approach;
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describe the importance of the supply chain and the contribution of supply-
chain risk management to the success of the organization;
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produce examples of the risks associated with outsourcing and how these risks 
can be successfully managed.