Elliot Book Chapter 12: Risk Management Environment and Culture

These vocabulary flashcards cover key terms regarding internal and external risk environments, risk ownership, organizational culture, communication, and social responsibility as outlined in Chapter 12.

Stakeholder

Any individual or organization that is directly or indirectly involved with or affected by organizational decisions or activities.

SWOT Analysis

A technique used by senior management to assess an organization's internal and external environments by identifying strengths, weaknesses, opportunities, and threats.

External Environment

The environment consisting of physical, social, legal, and economic categories that represent opportunities and threats to an organization.

Economic Environment

An external environment category involving macroeconomic influences such as business cycles, employment conditions, and levels of gross national output.

Internal Environment

The environment consisting of product, operations, technology and information systems, and cognitive categories that represent an organization's strengths and weaknesses.

Cognitive Environment

An internal environment category based on how individuals perceive risks differently, which influences the organization's culture, values, and risk policies.

Risk Center

A discrete unit within an organization, having a leader and specific objectives, at which level a particular risk or group of risks is most appropriately and effectively managed.

Risk Owner

An individual responsible for identifying and assessing the risks within his or her organization; specifically the stakeholder who either creates the risk or is primarily affected by its volatility.

Risk Ownership

The concept that responsibility for each activity that creates a risk for an organization is assigned to one party.

Organizational Culture

The shared beliefs, values, and accepted behaviors of the people and groups that compose an organization.

Risk Attitude

The organization's or individual's view/perspective of the perceived qualitative and quantitative value that may be gained in comparison to the related potential loss or losses.

Beliefs

The practices and concepts that employees in an organization accept as true, forming assumptions that drive behavior.

Values

Organizational elements exhibited through goals and the manner in which the organization pursues those goals.

Risk Seeking (Risk Naive)

An attitude that tends to overestimate positive results, has a short-term horizon, and views risk taking as an adventure.

Risk Avoiding (Risk Obsessed)

An attitude preoccupied with the negative side of potential risks, often preferring to transfer risk rather than innovate.

Risk Optimizing (Risk Managed)

An attitude that weights the risk-reward relationship realistically based on the organization's vision, mission, goals, values, and beliefs.

Risk-Aware Culture

A culture that encourages and supports the identification, assessment, and communication of potential risks and rewards as part of decision making throughout the organization.

Internal Communication Channels

The formal and informal paths within an organization that enable information to spread among employees and stakeholders.

Code of Ethics

The minimum standards of expected behavior for those to whom the code applies.

Social Responsibility

An organization's responsibility to its stakeholders and society to consider the consequences of its actions and to protect the welfare of society overall.

Governance

A set of parameters, often institutionalized and tradition-bound, within which governments and organizations operate.