Fundamentals of Risk Management

effective and efficient operations
The overall objective of risk management input into operations is to achieve operational 
efficiency that is protected from unplanned disruption. Disruption of operations is 
likely to be caused by a hazard risk materializing. The design of efficient operational 
core processes that are free from disruption will provide the organization with sig-
nificant competitive advantage or place the organization in a better position to deliver 
value for money.
Risk management can have a major impact on the operations of an organization. All 
stages of the risk management process are relevant to the continuity of uninterrupted 
efficient core business processes. Risk recognition and rating (risk assessment), respond-
ing to significant risks, resourcing controls, reaction planning, reporting on risk and 
review and monitoring are all critical inputs. In summary, risk management input into 
operations needs to be comprehensive if operations are to be efficient and uninterrupted.
Internal audit also has an important role to play in the delivery of efficient opera-
tions. Internal auditors frequently refer to the added value that internal audit
activities bring. This added value relates to the evaluation of control activities,
especially in relation to operations. Not only should the operations be effective and 
efficient, but the controls that are in place should also be effective and efficient. 
Internal audit activities have a significant role to play in providing the appropriate 
risk assurance and providing confirmation of compliance, where relevant.

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Core business processes
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All organizations need effective and efficient operations. In difficult financial and 
economic circumstances, it is important that existing operations continue to be
delivered as efficiently as possible. The efficiency of operations will determine 
whether the annual budget, which includes the annual business objectives, is delivered. 
Part of ensuring the success of the organization will be to improve the efficiency of 
operations. Delivering more efficient operations can be undertaken by developing 
activities so that they require less resources, and this may involve cost-cutting.
There is no point in operations being efficient if those operations are based on the 
incorrect activities or core processes for the organization. For example, it may be 
possible to arrange a very efficient means of travelling to your destination by car, so 
that the activity of travelling by car is as efficient as possible. However, it may be that 
the journey would be more effective if it was undertaken by train. In most busy cities 
in the world it is possible to hire a taxi and travel to your destination quite efficiently. 
However, the more effective way of travelling may be to use the underground or 
metro system, which is likely to prove to be quicker and less costly.
The business model is described in more detail in Chapter 20. It defines the cus-
tomer offering delivered by the resources of the organization and underpinned
by the resilience of the finances and the reputation of that organization (CORR). The 
business model (as represented by the acronym CORR) is considered in more detail 
in Chapter 20. The business model, therefore, represents the current (or existing) 
activities and operational core processes of an organization. Strategy and tactics will 
be designed to enhance and improve the business model by improving the effective-
ness and efficiency of operational core processes. It is important to note that the 
business model represents the current status of the operational core processes in an 
organization.