Pure Risk Management Assignment

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PICS07J ASSIGNMENT NO: 1
DUE DATE: 26/03/2013
UNIQUE NO: 726257
ST NO: 77940067
Question 1
a)Top-down approach:
This approach is based on a decision made by the board of directors, regarding implementing an operational risk management function for the organisation. This means that once an operational risk has been defined, and an operational risk management function has been defined, it is filtered down from the top management to involve the whole organisation. A bottom-up approach involves all employees in an organisation to ensure that they all understand the operational risk management. This approach is more preferable as it means that management can receive accurate information on which to base its control decisions and can therefore better implement control measures, as quickly as possible. This is a more practical approach.

This organisation uses a decentralised management structure, wherein top management of each division have the freedom to run their divisions in a manner that is aligned with the business, industry and market environment. The organisation believes that empowered employees enhance and sustain the entrepreneurial culture which ultimately adds value to the success of the organisation’s decentralised management structure. Notwithstanding this decentralised approach, the ultimate responsibility for retaining full and effective control rests with the Steinhoff International board of directors. Based on the above, I would say the organisation uses the top-down approach as well as the bottom-down approach, but leaning more towards the bottom-up approach but constantly being kept in check by the top-down approach as the ultimate responsibility rests with the board of directors. Because they give the divisional heads free reign in the running of their respective divisions; that is when the bottom-up approach is applied.

b) Risks and opportunities under sustainability:
i) Risks identified:
The inability to maintain and grow...
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