Fundamentals of Risk Management

Mission statement
Operational

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Risk governance
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An approach based on stakeholder expectations has many advantages. It facili-
tates a full and thorough validation of the core processes of the organization in
relation to the expectations that each stakeholder places on each core process.
An important aspect of managing an organization is balancing the various stake-
holder expectations. There are dangers inherent in achieving this balance, and a risk 
identification procedure based on analysis of stakeholder expectations is the most 
robust way of ensuring that these dangers are recognized, analysed and minimized.
The analysis of stakeholder expectations is also one of the fundamental require-
ments of the business process re-engineering (BPR) approach. The stakeholders in 
the current and future activities of the organization can be identified. The expect-
ations of each stakeholder in relation to each stated objective and the corporate 
mission can then be evaluated. Shared expectations will emerge and the core
processes of the organization can then be defined (or refined) specifically in terms of 
the delivery of these shared expectations.
Although the analysis of stakeholder expectations can be one of the most robust 
ways of identifying risks, there are implications in terms of the time and effort
required for this approach to be successful. BPR can be a very time-consuming exercise 
when undertaken thoroughly. The benefits of taking a BPR or core pro cesses approach 
include the ability to identify the core processes that are most vulnerable to risk 
events. This will enable the identification of stakeholders whose expectations are 
most likely to be dissatisfied because their expectations have not been delivered.
stakeholders and strategy
It has been clearly established and demonstrated by research that incorrect risk man-
agement decisions related to strategy can destroy more value for an organization 
than incorrect risk management decisions associated with the operations or projects 
undertaken by the organization.
Stakeholder expectations are delivered by the core processes of an organization. 
Table 29.2 sets out the range of stakeholder expectations for a typical sports club. 
The core processes that deliver stakeholder expectations can be strategic, tactical, 
operational or compliance (STOC), shown in the bow-tie representation of the risk 
management process in Figure 11.1. Strategic core processes need to be the most 
robust processes in the organization, and indeed this will be required by major stake-
holder groups. Such stakeholders include financiers and other shareholders who are 
interested in the long-term success of the organization.
The expectations of supporters include good stadium facilities, and a strategic 
core process may need to be established to manage the building of a new stadium. 
This would be a significant investment that will require substantial support from 
financiers. In order to secure support, the club will need to be aware of the expect-
ations of the financiers and ensure that the plans for the new stadium and the financial 
arrangements that will be put in place fulfil the necessary stakeholder expectations. 
The construction phase of acquiring a new stadium will be a significant project for 
the club, with a different range of stakeholders to consider.

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