Stakeholders in the Enterprise Risk Management Setting

A stakeholder in a risk management setting is a key role player in risk management. This treatise describes two types of stakeholders in a risk management, namely internal stakeholders and the external stakeholders. Internal stakeholders are those stakeholders with a role in, amongst other things, processes, procedures, policies, number of divisions, the reporting lines, value system, corporate culture, management style, and technology, all which impact the manner in which the risk information flows from the source to the integration stage. External stakeholders are those stakeholders with which the enterprise interacts in the environment in which it operates. Since the risk management field relies on information, we propose that to be in a position to identify, assess, and treat the risk, as well as monitor and report on the risk, any person would need to have information about that particular risk. The information within the risk management setting is subject to three types of complexity, inclusive of those caused by the architectural nature of the organisation, those that are as a result of internal dynamics of the organisation, and those resulting from external shocks such as political, economic, and natural factors. Owing to the differences in enterprise-wide risk management policies, the manner in which things are done would differ from one enterprise to the next. In some enterprises, the risk information will either take the bottom-up approach or the top-down approach. In the bottom-up approach, the risks are identified, analysed, and rated, and mitigations are defined using a bottom-up approach. This means that the information moves from the bottom echelons up to the top echelons of the enterprise. In the top-down approach, the risks are identified, analysed, and rated, and mitigations are defined using a top-down approach. This means that the information flows from the top echelons of the enterprise down to the lower echelons. Essentially, the top-down approach should be viewed as the opposite of the bottom-up approach. We argue that both the top-down and the bottom-up approaches present gaps when it comes to information flow. We introduce the hybrid model which we argue is an ideal tool. The hybrid tool closes the potential risk information leaks in both strategic and operational gaps. The challenge with the hybrid approach relates to the complexities caused by various divisional processes, and that whilst the sheer size of information that would need to be analysed would address the comprehensiveness and the leaks, this has its own downsides. Besides, it could impact the accuracy and speed of decision-making. Therefore, technologies of the fourth industrial revolution such as those discussed in Chapter 3 become crucial in addressing accuracy and speed.