Risk Management for Frauds - Misappropriation- myassignmenthelp

Question: Discuss about theRisk Management for Frauds, Misappropriation and More. Answer: Risk is inevitable and speculative in every business be it large business or small and most of the times risk implies huge loss for the business organization. Risk in business can occur from various reasons such as increase in competition, financial loss and more (Bottanl, Monica Vignal, 2009). Therefore, to overcome the risk in business, organizations incorporate different strategies of risk management. However, it should be noted for preventing loss, risk management plays a major role and thus it helps to promote stability with the business organization. Furthermore, in order to control internal risk, the risk management controls it by protecting the business organization against huge market, legal issues and operational risks (.Brustbauer, 2016). Risk management also protects its targeted customers from various losses such as frauds, misappropriation and more. The major role of the risk management is to provide financial securities to the firm, so that it can inspire and encourag e stakeholders to invest in the respective firm. One of the most important risk management tools that are used by majority of business enterprises to avoid risk is the Enterprise Risk Management (ERM) (Clark Tunaru, 2015). This tool helps to analyse the type risk occurred in the firm, and accordingly provides effective measure to reduce it. For instance, in case of managing employees and to avoid risk related to staff turnover, the risk management team needs to identify and understand various organizational laws such as employment laws, labour union contracts and more. Furthermore, the risk management team should also focus on the organizations policies and practices of hiring employees and should create a safe work culture for the employees. Furthermore, while assessing any kind of risk, the risk management should anticipate and asses every situation and accordingly should anticipate the results of the actions taken to overcome the loss. To prevent loss in the company, risk manage ment should tend to identify the types of risk and then transferring different types of risk in to various insurance forms. Prior to this, there are three major qualities of a good risk management program that includes the risk management program should not be relied upon on one single person. Secondly, with the support of the senior level authorities in the work place will help to reduce the amount of risk and can improve for success. Thirdly, the program of risk management works smoothly when all the goals and the results are shared with the internal and external stakeholders (Higgins, 2006). As more business are increases in the present days, risk has also increased, therefore business organization should comply the laws and policies in order to reduce the risk to certain amount. In order to reduce risk to a certain level, many organizations have implemented the principle of as far as reasonably practicable. It implies that business organization should imply health and safety nature in the work environment while conducting any kind of business (Hopkin, 2017). Furthermore, the term as far as reasonably practicable also implies that organization should analyse all the possible circumstances so that employees within the organization should be free of risk. It also determines the amount of resources, be it financial or any other resources that are required to manage the risk effectively. In broader terms, organization and firms adopt this strategy so that the risk can be balanced in terms of time, resources and cost (Khakzad, Khakzad Khan, 2014). By using the strategy of as far as reasonably practicable, organization sets major goals so that it could prevent risk, and if risk occurs, the organization can gain back its resources. For instance, in case of JP Morga n huge loss, the company managed its risk effectively by implicating the respective strategy. However, it should be noted that the concept of loss prevention adopted by business organizations to prevent any kind of monetary loss in the business environment (Larson, Mather Dell, 2007). It is a set of practices that has been implies to restore profit within the organization, as this can reduce loss. In any business loss occurs from many reasons such as it can occur from human actions that include fraud, theft, vandalism and more. Therefore, with the help of loss prevention, firm tries to avoid such loss. Though loss prevention is mainly adopted by the retail industries, but in the present day with the increase of risk, loss prevention is adopted by other industries also. In order to prevent loss, industries and firms relies on four major implications that include organization need to be focussed to prevent the loss, as it is every employees responsibilities to prevent loss within the organization. Secondly, to reduce shrink, the management need to be consistent, that means policies and guidelines should be followed thoroughly to prevent loss. Organization needs to be visible to generate better outcomes, thus it can conduct audits twice a year to analyse the resources of the company. And the last aspect is to be proactive rather than active to prevent risk such as creating a trustworthy work environment will help to minimise loss in the firm. However, there are certain limitations while adopting loss prevention method as sometimes loss can also occur from employees such as refund fraud. Therefore, training manuals provided by the organization to train employees to be aware of risk (Loosemore et al., 2006) In the present day with the increase in number of business organizations, there is an increase in risk, therefore in order to prevent risk, organizations and firms have incorporated the Enterprise Risk Management approach. According to the Enterprise Risk Management, it helps in analysing the risk that causes firms failing to meet their goals and objectives. As per the Enterprise Risk Management and Statement on Management Accounting there are various risk management tools that are used by firms to mitigate risk (Makin and Winder, 2008). One of the most common tools used by organization to minimise risk is the brain storming tool. With the help of brainstorming techniques, objectives and goals of the organizations are stated clearly among the employees, and accordingly with employees creativity they generate different types of risk that can be faced by the particular organization. This tool is best appropriate when the approach towards the risk is unstructured and the management enco urages group members to generate the possible risk (McNeil Frey Embrechts, 2015).. Many small and start up organization follows the brain storming techniques as it helps to minimise risk in small organizations. Furthermore, it should be noted that facilitating a brain storming session requires a proper leadership skills who can guide the other participants and the most important thing participants need to understand the major aspect of the brainstorming tool that fits in Enterprise risk management approach (Pollino, Thomas Hart, 2012). The brainstorming tool sheds light on major aspects such as how risk and the objectives of the organization are interlinked with each other and to what extent this could have an impact on the business. As various cross-functional employees participate in the brain storming session sharing their experiences and perspectives, therefore this can prove to be a successful tool in identifying the risk and accordingly minimising it. For instance, organizat ion with the help of brain storming session analysed human risk such as succession planning (if the team leader departs the company) and accordingly tries to reduce it by motivating the leader with rewards and incentives (Reason, 2016). Prior to this, there are certain limitations while applying the brainstorming tool such as, participants should have clear assurance that the ideas provided by them should not humiliate other team members in the group. Another limitation is that sometimes group members are not willing to express their ideas, as they think that their ideas will be judged as inarticulate that will have no meanings or values. This can negatively affect the risk identification process. However, if all these things are taken care of, brain storming tool can give fruitful result in reducing organizations risk (Sadgrove, 2016). The concept of Total Risk Management had been introduced by Haimes and according to him it is the systematic tool that analyses the risk assessment and accordingly manage it. The total risk management concept of Haimes identified four main sources of failure within the business organization. The four main sources are hardware failure, software failure, organizational failure and the human failure (Haimes, 2009). In case of Globoforce Organization, the organization has analysed the risk with the help of four sources of failure. However the four sources of failure are interlinked with each other and are internally comprehensive. In case of hardware and software failure, these are the most devastating failure in the organization. Failure in the case of technology can result in loss of resources as well as time (Slovic, 2016). In case of Globoforce organization, by implicating the hardware and the software failure, the organization has analysed the various risk related to technologies th at can have a negative impact on the overall business. With the help of these sources of failure, the organization analysed the risk scenario and implemented ideas to reduce it. The four sources of failure of Haimes identified all the internal sources of failure were risks are more likely to occur. I t should also be noted that software risk mainly defined as severity of unpleasant effects of software that lowers the performance. With the increase in software complexity, the need to manage the risk also increases. Therefore, with the implication of this failure type, the organization reduces their technical risk. As per their procedures and guidelines, after analyzing certain risk, employees are being trained to increase their knowledge and skills in order to deal with the software failure risk. However, it should also be noted organizational failure and the human failure are connected to each other. Prior to this, as organizational and human failures are the most common type of fai lures that takes place within the organization, and by implicating such failures, Globoforce tends to examine the sources of risk and accordingly prevented it. Organizational failures result in loss of valuable resources, management problems that lead to poor decision making process and more (Viner, 2015). On the other hand, human failure results to fraud and theft by the employees such as stealing of important resources of the organization. As both are interlinked, therefore by implicating these sources of failure, Globoforce has analysed that their employees were stealing valuable resources from the company and that has lead to huge loss of the company. Accordingly, the organization tried to prevent the risk by providing proper training to the employees regarding the policies and procedures, so that they can be aware of the internal loss. It should be noted that by implicating the sources of failures, business organizations can prevent and minimise their risk. References Bottanl, Monica Vignal (2009), Safety Management Systems: Performance differences between adopters and non adopters, Safety Science 47, pp155-162. Brustbauer, J. (2016). Enterprise risk management in SMEs: Towards a structural model.International Small Business Journal,34(1), 70-85. Clark, E., Tunaru, R. (2015). Emerging markets: Investing with political risk. Haimes Y. 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