Importance of Risk Management in Business Organizations

Running head: RISK MANAGEMENT
Risk Management
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Executive Summary:
The report below throws light on the importance of risk management in business organisations.
First of all, the report shows that risk attitude and risk cultures of organisations are interrelated.
This means that companies have to ensure that both the variables are aligned to each other. The
report then goes on to short that having an appropriate risk culture holds immense importance to
companies concerned. Finally, the report goes on to show that appropriate risk cultures are
integral of the organisational cultures of companies.

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Table of Contents
Executive Summary:........................................................................................................................1
Introduction:....................................................................................................................................3
Interdependence of risk attitude and risk culture:............................................................................3
Risk attitude:................................................................................................................................3
Risk culture:.................................................................................................................................4
Interdependence of risk attitude and risk culture:............................................................................5
Importance of building risk culture within project teams:...............................................................7
Appropriate risk management:....................................................................................................7
Profit generation and cost cutting:...............................................................................................8
Expansion of business:................................................................................................................8
Attribute of good risk culture:.........................................................................................................9
Conclusion:....................................................................................................................................10
References:....................................................................................................................................11

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Introduction:
Risk refers to uncertain situations which are capable or tend to cause loss of assets to
business organisations. Beasley et al. (2019) while describing the predominance of risks in the
modern business environment, ‘In the economic landscape of the 21st century, an
organization’s business model is challenged constantly by competitors and events that
could give rise to substantial risks.’ Thus, it is evident that risks are inseparable parts of
business operations and have negative impact on the latter. This require business organisations
develop a risk culture which enables appropriate risk management to the feasible extent. The
business organisations require to develop an appropriate towards risk culture in order to ensure
appropriate risk management. The aim of the report is to delve into the interdependence between
risk attitude and risk culture. The report would then do on to delve into the importance of
building risk culture within project teams to ensure efficient risk management.
Interdependence of risk attitude and risk culture:
Risk attitude:
Risk attitude and risk culture are interdependent. Murray-Webster and Hillson (2016)
define the term risk attitude as the particular attitude of individuals towards particular situations
of risks. Bromiley et al. (2015) applies the concept in terms of organisations. They mention that
business organisations require to develop appropriate attitude towards risks. They propose the
approach of enterprise risk management or ERM to deal with the risks strategically. This is
because risks which business organisations face are not exclusive of each other and in fact are
interconnected. This interconnected nature of the business risks necessitate business
organisations to develop risk. As per of article titled ‘A Better Way To Think About Risk’
published in 2014 in the Harvard Business, risk attitude or the approaches in which individual