Fundamentals of Risk Management

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Risk governance
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often unwelcome stakeholders. There may be a substantial conflict between a mining 
company that wishes to extract minerals and the local population who do not want 
heavy industrial activities taking place in the area.
Business process re-engineering (BPR) is a technique to ensure that an organiza-
tion has the most effective and efficient processes and operations. A starting point for 
many BPR exercises is to identify stakeholders and their expectations. The delivery 
of shared stakeholder expectations is then undertaken by the core processes of the 
organization. Core processes are the high-level collections of activities that are
fundamentally important to the organization.
For a sports club, the ‘delivering success on the pitch’ core process will be funda-
mental. This process will be important to many stakeholders, including supporters 
(or customers), players (or staff) and sponsors (or financiers). The benefit of this
approach is that the organization can be defined by a small number of core pro cesses 
that should cover strategy, tactics, operations and compliance. An enterprise evalua-
tion of these core processes and the risks that could impact the core processes can 
then be undertaken. By taking this approach, risk management activities will be fully 
embedded in the organization.
Depending on the nature of the stakeholder, questions should be asked about the 
risk awareness of the organization, the activities that are designed to achieve risk 
improvement, and risk governance arrangements within the organization. Relevant 
stakeholders are entitled to receive information on the risk profile of the organiza-
tion. They are also entitled to information on the arrangements for risk improvement 
and the metrics that are in place to monitor risk performance. Finally, stakeholders 
are entitled to information on the risk appetite of the organization and the arrange-
ments for incorporating risk into the development of strategy.
The box below provides an example of how stakeholders will have different ex-
pectations of an organization. Sometimes, these expectations will be contradictory. 
Even if they are not contradictory, it is helpful for one group of stakeholders to have 
an understanding of the expectations of the other groups.
Assume that a theatre is seeking to involve all stakeholders in its activities. This will extend
to consideration of the objectives of performers at the theatre, including artistes and actors. 
There needs to be a distinction between the objectives of the performer and the requirements 
of the audience. For example, an established musician may wish to promote a new album,
but the audience will want to hear the well-known favourites from previous ones.
The performer will have the best chance of presenting a successful show if the starting 
point is an evaluation of audience expectations, followed by an evaluation of the expectations 
of the theatre. The performer can then plan the specific content of the show to be consistent 
with those expectations as well as taking account of his or her professional and personal 
objectives. The theatre may encourage this approach and recognize the performer as a 
stakeholder, but encourage the performer to consider other stakeholders and their expectations.
stakeholders in a theatre

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