Risk Management Strategy: The Westpac group
Risk Management Strategy
Analyze the risk factors for financial investment and insurance products at Westpac Group
There are several risk factor that any financial investment and insurance products company is exposed to. These risks involve credit risk, liquidity risk, governance risk, development risk, operational risk and strategic risk. The Westpac group is also exposed to these different types of risks where the customers of the finance company relate credit risk to the risk of financial loss resulting out of a failure to meet the financial obligation (Bank Australia, 2015). Then there is liquidity risk related to the risk when the company is unable to fund assets and meet obligations while governance risk is related with rules, policies, procedures and regulations that define the operational administration and management of the company. Here the focus is on management of risk and its compliance (Australian Government, 2017). The development risk is a category covering various risks related to promotion and communication of the products and services to potential customers and operational risk is related to loss due to failure of internal processes (Bank Australia, 2015). Finally, the financial investment and insurance products companies like Westpac group are exposed to strategic risk covering the potential loss resulting out of carrying with an unsuccessful corporate strategy. There is a need for the company to focus on each of these risks while defining the strategy of managing risk at the company.
Determine the appropriate risk exposure management strategies
The risk exposure management strategy will focus on focusing on the most important risks that can prove to be high in hazard for the company. There needs to be a more risk averse culture introduced across the organization by steering away from buying the risky instruments. The risk management strategy should be applied across the organization through a decentralized decision making model with centralized ownership of the process (Santomero, 2012). This will ensure a safeguard against unwanted risk and a better approach towards following processes of risk management. Further the strategy is to drive the process through clear roles and responsibilities where every individual across the organization is responsible to identify any possible risk and ensure avoidance of any high hazard risk for the company (Westpac Group, 2018). Moving ahead it is to be noted that there is a need of consistent and rigorous assessment of risk along with the quantification of the net benefits. Such a strategy is necessary to lessedn the chances of failures and avert the risk associated with dealing with complicated instruments.
It is also required that It systems are used to facilitate the process of risk management. With the increasing value of IT there is a need to develop systems that are driven by users and help in timely control and monitoring the compliance of various regulations and legislation associated with the industry.
Finally, the risk management strategy of the company will focus on developing and maintaining a culture of risk management through adequate training sessions dealing with corporate risk management, through effective communication and discussion on status of risk management through management review meetings and adding incentives and performance guidelines. Here, the accountability should be increased by defining explicit incentives and performance metrics related to management of risk and incoproate specific goals of managing risk within the performance evaluation procedures (Mehrban 2010).
Communicate these strategies to relevant staff and intermediaries
The communication of risk management strategies will be achieved through clear and effective communication defined specifically for different parties. Here strategies will be communicated regularly in a well-engaged manner to avoid any miscommunication and avoid any forgotten communication (Mehrban, 2010)). Here the process will start with listing of the audiences like employees and intermediaries at the company. The communication will be done through Emails and newsletters with a reinforcement carried on through notice boards and regular activity on social media. Further informal discussions will be encouraged between managers and staff members acting as a source to avoid any miscommunication and getting an idea of understanding of strategies by the staff members working at various levels across the organization.
The plan of communication will be based on objectives of communication like for staff members the objective is to ensure risk avoidance and early identification of any risk to take necessary steps. On the other hand for the intermediaries the communication objective is to build trust between the company and the intermediaries to ensure long-term association.
It is also necessary that a regular check be maintained on the effectiveness of communication plan (Santomero and Oldfield, 2012). This will be endured through informal communication and team meetings will staff members and regular formal discussions with the CEO in open-house meetings. This will help in understanding the way message is received by every individual and get recommendations from him or her in order to make the communication of strategies even more effective in future.
As a final step the recommendations received from the staff and intermediaries will be applied to make the communication even more effective and easy to grasp for the stakeholders to risk management plan. This will ensure that the communication plan is made in consultation with team members and intermediaries ensuring clarity of objectives in place (Santomero and Oldfield, 2012).
Personally manage the risk assessment strategies
The risk assessment strategies will be managed on the detailed analysis of previous situation, current situation and the projects future situation. Here the key focus will remain in creating documents as per the cost and benefits expected, contingency planning, work breakdown schedule and goals and objectives. The plan for management or risk assessment strategy will comprise of three key steps namely, reviewable of intended outcomes, information collection and measurement of success. Such a process followed by communication of results from reviews and evaluations will ensure relevant follow up actions for appropriate and efficient implementation of risk exposure strategies across the organization.