Coursework 2: Specification
As per the general research, it has been identified that in this world of economics and finance, the risk management is termed as the application of recognising the possible risk in advance in the organisation, measuring the risk and preventive steps in order to curb and reduce the intensity of the risk in the business organisation (The Economic Times, 2021). Therefore, when an individual tries to create the decision of investment, it helps to exhibit itself to a number of economical risks. The portion of such identified risk usually varies upon the type of the economical instruments. These are effective financial or economical risks which might become a formation of higher inflation along with the recession, bankruptcy and the volatility in the capital markets. So gradually, in correspondence to reduce and control the subjection of investments to such risks along with considering the investor practice and the fund manager of the risk management (Ogden, 2021). The ISS (international space station) program accompanies the incorporated risk management procedure (qualitative and quantitative). It is incorporated into the project management of the International Space Station. The procedure of risk imposes ongoingly about the wrong aspects (risks), demonstrating the types of risk that should be maintained, execution of the strategies that should be dealt with the risk along with measuring the effectiveness of the executed strategies.
According to (Baldacchino et al. 2020), sometimes there are a few business organisations who do not look after or deliver importance to the risk management during making such investments decisions which might inflict damage to the investment in terms of economical confusion and turmoil on the finance and economy. Sometimes the change is considered as the greatest challenge in the business organisation that can affect the GRC. In general terms, the popular businessmen illustrate the factors such as the court decision, business relationships, newest laws, economic and geo-political forces that might frequently influence the present and required policies of the organisations (Ogden, 2021). The business should integrate the standards for divulging and describing. They should also put an eye on the business objectives and aims, which is not considered as an adequate and complete review of performance. The ISS should assure and ensure about the affordability, safety, cargo access along with reliable crew as well as to return from ISS (International Space Station). In order to develop the risk reporting for better conversion, the organization should also deliver transparent and simplest overviews but need to be prepared for delivering the drill-down on request. It's their responsibility to interconnect with the risk to the business operations along with the economical impact (The Economic Times, 2021). The approach of risk management delivers a systematic structure that compels the administration to demonstrate the recognised risks in regular terms in order to mitigate and reduce the risk items.
There are various tiers of risk that come attached with other variation of divisions of operative classes. This provides few effective ideas of risk management that can be taken into consideration such as (Nasa.gov, 2021):
- To analyse the change in the organization's internal, external and regulatory investments
- Develop the risk reporting for better conversion with the executive administration
- To supervise the supply chain to reduce the cyber risks
- Develop a cyber security awareness program
The risk management is combined of the five aspects that helps to address the risk in the organization in an effective way such as identifying the risk, analysing the risk, controlling the risk, financing the risk along with claiming the administration might be applicable to the uttermost condition or problem (Muslih, 2019). These are principles that would be applied in the day to day life of an organisation.
There is various principle in correspondence to the risk management which are considered as:
- An individual must receive and obtain the risk when convenience exceeds the cost.
- An individual should also receive the unpredictable and avoidable risk.
- Managing and anticipating the risks by planning
- Making decisions on the risk in the accurate time at the accurate tiers.
Risk management theory
The theory expands the analysis of the enterprise to involve separation of control, managerial motivation and ownership. In this ground of integrated risk management related to the issues of agency have been highlighted to affect the administerial traits towards hedging and risk takings. This explains the arrival of agency risk when the investors or the stakeholders (who are the principles) assign the agents (managers or employees) to take action on their behalf (Panda and Leepsa 2017). The theory helps to recognise the conditions of the agency risks which are higher. It also helps to indicate principles of risks for its reduction through the uttermost effectual organisational structures.
The probabilistic risk assessment (PRA) is known as a multi-disciplinary approach to the workers to assign the factors contributing to demonstrate their relevant specification within a system (Albuquerque, Carter and Gallani 2020). The international space station PRA captives the potential accident scenarios that conduct to several unwanted repercussions known as the end states. With reference to ISS (The International Space Station), the organisational risk is considered as the:
- Catastrophic loss of the Station
- Loss of the crewmembers
- Loss of a vital station system
- Shutdown or loss of a pressurised module.
Tools used in ISS (International Space Station)
The ERM (enterprise resource management) describes the software that permits a firm maintain the user's retrieval of its network resources more effectively. The ERM software usually lets a sign on to a distinguishable firm system along with its implementation utilising the similar passwords (Nasa.gov, 2021). The ISS (International Space Station) program office utilises an incorporated risk administration database which is known as IRMA to maintain the risk along with interacting the risk data throughout all the ISS (International Space Station) managing organisation. There should be a categorisation of each risk along with its matrix severity where the tasks that ensure the mitigation are entered into the databases. It is considered as the everyday accessible tool for maintaining the organization along with their risk. It helps to provide advantages and benefits to the ISS managing organisation (International Space Station). When the organisation is maintaining addressing its sub organisational risk then the IRMA records whether that agrees with the database and chooses to mitigate the risk in the organisation (Albuquerque, Carter and Gallani 2020). Each of the mitigation tasks is completed and it is accountable for managing, which serves a way all program-maintaining organisations which help to calculate the magnitude of the risk.
The ISS (International Space Station) has a two level of governance structure concluding of the: Executive Group management board and the Board of Directors. As it is highly crucial for the Board of directors of ISS in order to accomplish good corporate governance. Henceforth, the board of directors day to day revise the ISS (International Space Station) group's actions, statutory necessities, recommendations on corporate governance as well as their business environments (Mojtahedi and Oo 2017). The Executive group management board helps to bring out the day to day management of the ISS group. Both the Board of directors and the Executive group management board are evaluated in a dynamic procedure in order to bring out the good corporate governance practice at the International Space Station. It is ongoingly accomplishing all the requirements for the modification to facilitate the stakeholders of the International Space Station along with their group itself (De Gooyert et al. 2017).
The aim of corporate governance is to benefit the effectiveness along with the well-judged and entrepreneurial management that helps to provide the longer-term succession of the company or organization. The role of the shareholders in the corporate governance is to hire the auditors and directors and to please themselves with an accurate structure of governance is in place.
Impact of stakeholders on risk management procedure
It has been identified that the stakeholder’s orientation requests that the organisation look for and include the risk stakeholders of the organisation in the procedure of risk management (Muslih, 2019). The tiers of participation or collaboration will be based on both the recognised risks along with how the shareholders are awaited and anticipated to be influenced by the suggested solutions as well as procedure of decision-making. In a risk management procedure an organisation should prioritize the risks by likelihood along with the influence in accordance to give the utmost attention to the risks feigning (Mojtahedi and Oo 2017). There are various advantages of engaging stakeholders and involving a better acknowledgement of the risk by developing credibility and trust. The stakeholders feel included in the decision-making and activities influencing their future, stakeholders perceive that their attentiveness which are taken solemnly by the organisation.
The program risk advisory board
As commented by De Gooyert et al. (2017), the topmost tier programme risk board is the ‘Program Risk Advisory Board (PRAB). The prime purpose of the PRAB (Program Risk Advisory Board) is to assign the ISS programme manager is maintaining the topmost risk of the International Space Station program. The PRAB is considered as the representatives from each of the maintaining organisation, main contractors, other centers of the Space station or any kinds of international partners (Baldacchino et al. 2020).
Gradually, the IRMA used to review the top ranked risk at each of the PRAB in order to manage and control the organisation. The PRAB (Program Risk Advisory Board) helps to demonstrate the magnitudes of the risk from the perspective of the Program manager. The program of IRMA scrutinises the administrative risks by accessing all the managerial resources along with the accurate activities (Albuquerque, Carter and Gallani 2020).
The role of the stakeholders in risk management
- Effectual risk controls with the treatment policies along with the operative controlling in ISS because of multiple perspectives in accordance to the relevant risk.
- Distributing the responsibilities towards monitoring and controlling by all the individuals who are included as stakeholders (Ogden, 2021).
- Stakeholders helps to embedded the Risk in the day to day running of the ISS
- They help to realise the opportunities by providing the lasting and informative solutions of the risk in the ISS.the responsibilities towards monitoring and controlling by all the individuals who are included as a stakeholder.
- Stakeholders helps to embedded the Risk in the day to day running of the ISS
- They help to realise the opportunities by providing the lasting and informative solutions of the risk in the ISS (Baldacchino et al. 2020).
- Helps to identify and document the risk mitigating options along with investigating their influence on the unpredictability throughout the programme.
Apart from all these roles and responsibilities played by stakeholders of the risk management in ISS, there should be a report in the risk management status and there are a lot of issues relevant with the managing organisation control panel or board. Their responsibility is to address and control the risk management activities of all tiers of the managing organisation (Baldacchino et al. 2020). Their prime responsibility is to communicate and interact throughout the programme so that the consequences along with the inputs can be better maintained and controlled. The incorporated deliberation of the risks is being addressed into all the major decision making also throughout the whole advancement cycle (De Gooyert et al. 2017). There is an ongoing risk management procedure that is considered as portrayed.
The risk management required to follow the strategies of the risk management in terms of ISS which are required to be executed successfully to the department of defence programs (DoD) and to the space shuttle. The ISS should enhance the security of the Nation through the partnership with DHS, DoD along with other International or United States authorised agencies (Ogden, 2021). The ISS should assure and ensure about the affordability, safety, cargo access along with reliable crew as well as to return from ISS (International Space Station). It's the responsibility of the ISS to ensure the abilities for laboratory research in Low Earth orbit. Their prime role is to improve the ESG ratings (environmental and social quality score that will help the ISS to understand the risk of the documents. This will help ISS to execute a wide range of workability divulgence options in order to anticipate the change in the organisation (Mojtahedi and Oo 2017). They should support the scientific research along with other extraordinary and requiring attribution of the individuals in the space.
Albuquerque, A.M., Carter, M.E. and Gallani, S., 2020. Are iss recommendations informative? evidence from assessments of compensation practices. Evidence from Assessments of Compensation Practices (March 29, 2020).
Baldacchino, P.J., Camilleri, A., Schembri, B., Grima, S. and Thalassinos, Y.E., 2020. Performance evaluation of the board of directors in listed companies: A small state perspective. International Journal of Finance, Insurance and Risk Management, X, 1, pp.99-119.
De Gooyert, V., Rouwette, E., Van Kranenburg, H. and Freeman, E., 2017. Reviewing the role of stakeholders in operational research: A stakeholder theory perspective. European Journal of Operational Research, 262(2), pp.402-410.
Mojtahedi, M. and Oo, B.L., 2017. Critical attributes for proactive engagement of stakeholders in disaster risk management. International Journal of Disaster Risk Reduction, 21, pp.35-43.
Muslih, M., 2019. The benefit of enterprise risk management (ERM) on firm performance. Indonesian Management and Accounting Research, 17(2), pp.168-185.
Nasa.gov, 2021. Nasa.gov. Available at: <https://www.nasa.gov/pdf/55411main_28%20ISS.pdf> [Accessed 28 March 2021].
Ogden, M., 2021. 5 Ideas for Risk Management. [online] Navexglobal.com. Available at: <https://www.navexglobal.com/blog/article/risk-management-ideas/> [Accessed 28 March 2021].
Panda, B. and Leepsa, N.M., 2017. Agency theory: Review of theory and evidence on problems and perspectives. Indian Journal of Corporate Governance, 10(1), pp.74-95.
The Economic Times, 2021. What is Risk Management? Definition of Risk Management, Risk Management Meaning - The Economic Times. The Economic Times. Available at: <https://economictimes.indiatimes.com/definition/risk-management> [Accessed 28 March 2021].