Risk officers play an important role in an organization. They run the risk and governance program of an organization through maintaining a risk register, key risk areas internal inventory, track the processes of remediation in areas of weakness, risk assessment, and risk monitoring. According to Bromiley et al., (2015) when risk managers are employed on part time, an organization benefits by saving on reduction of overhead costs. The risk officers are called upon only when assessments or identification of risks need to be done. Having them on part-time reduces need for a big office or workspace due to a reduction in the number of workers. However, part-time risk officers have a drawback. The organization would be vulnerable to new risks that had not been planned for. Besides, surface key issues may unlikely to be corrected.
A company whose strategy failed due to its not considering the actions of external players
An example of a company whose strategy played due to lack of consideration of external players is Nokia Company. Nokia had established itself as one of the largest phone companies but failed to keep up with competition, especially when IPhone smartphones entered the market (Gibbert, 2005). Due to complacency and a poor research and development team, the company became technically inferior to Apple. IPhones entered the market and became disruptive due to their smartphone technology. Nokia management had not foreseen the impact of smartphones in the phone market.
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3 common ERM mistakes and how they can be avoided
Three common ERM mistakes include failure of risk exposure understanding, focusing on wrong risks, and relying on instinct to assess risk. When risk managers fail to understand the level of risk exposure, they attach the wrong strategy to a risk thus leading to failure (Bromiley et al., 2015). A focus on wrong risks causes escalation of real threats that expose the organization to threats. Reliance on instinct leads to short term gut reactions.
Reference
Bromiley, P., McShane, M., Nair, A., & Rustambekov, E. (2015). Enterprise risk management: Review, critique, and research directions. Long range planning , 48 (4), 265-276.
Gibbert, M. (2005). Boundary-setting strategies for escaping innovation traps. MIT Sloan Management Review , 46 (3), 58.
