Fundamentals of Risk Management

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Reputation and the business model 
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FIgURE 
20.1
Components of the business model
Customer
• 
Customer segments and targets 
• 
Marketing and sales activities 
• 
Customer servicing and support 
• 
Distribution routes and channels 
Offering
Alignment of available resources and capabilities to deliver the 
intended customer value proposition and related benefits 
Resources
• 
Data, capabilities and assets 
• 
Partnerships and networks 
• 
Organizational structure 
• 
Activities and core processes 
Resilience
• 
People, commitment, purpose, capability, culture, leadership and governance 
• 
Ethos, organizational activities and values, standards, ethics and reputation 
• 
Expenditure based on development, infrastructure, sales and support costs
• 
Revenue streams based on sales volume, profit and cash flow requirements
the events that could disrupt the efficient delivery of the offering, as well as identify-
ing opportunities for improving operational and compliance efficiency.
It is important to note that the business model represents the existing mechanisms 
for the delivery of the customer offering and provides a description of operational 
and compliance activities. Risk assessment of the existing business model will enable 
the organization to identify options for improvements to customer offering and/or 
the business model. The identification of an updated business model will represent the 
strategic position that the organization wishes to achieve. Tactics for implementing 
that strategy will need to be devised, as identified in Figure 19.1.
Business models can be quite complex and have a large number of dependencies, 
including suppliers and outsourced facilities. The weaknesses and inefficiencies in
the existing business model need to be identified and analysis of the business model 
represents an additional way of undertaking a risk assessment. The importance of 
resilience within the business model is considered in the next section. Other factors 
that are important in the business model are related to reputation and ethical trading. 
A particular consideration for many organizations is corporate social responsibility 
within the supply chain. Analysis of the business model will enable an organization 
to assess the supply chain and identify embedded risks, including ethical risks that 
could damage the reputation of the organization.