Lecture Art of Leadership and Motivation - Lecture 25

After studying this chapter you will be able to understand: Conceptualizes leadership as a process that is centered on the interactions between leaders and followers, makes the dyadic relationship between leaders and followers the focal point of the leadership process, challenged this assumption and directed researcher''s attention to the differences that might exist between the leader and each of the leader''s followers.

Art of Leadership & Motivation HRM – 760 Lecture ­ 25 FACILITATOR Prof Dr Mohammad Majid Mahmood Role of Leaders in Risk Management What is Risk?  Risk arises from uncertainty; but all  uncertainties do not carry risk  Possibility of an unfavorable outcome of an  uncertainty is risk Is Risk Management a  development planning issue?  Planners are responsible for the protection of  company assets  Planners must work to improve shareholders’  value, which is not possible without taking  some risks  Not taking risks may be the biggest risk Why take risks?  Because you have to  Because it brings rewards Risk Management Process  Risk Identification  Risk Assessment  Selection of risk management techniques  Implementation  Review Risk Identification  Risk profile of a company  Formal listing of all potential risks  External professional help  Risk is inevitable; however unfavorable  consequences of risk can be controlled Classification of Risk  Production risk  Risk of inputs  Risk of outputs  Environmental risk  Political risk  Economic conditions risk Risk Assessment Having listed all the potential risks, ask:  How likely is it for any of these risks to  actually materialize?  What is the maximum possible loss that can  arise from each of the listed situations?  Can you stand that loss? Risk Management Techniques  Risk avoidance  Loss prevention and control  Internal controls 10 Monitoring Internal Controls  The system should generate reports   Frequency of reports Adequacy of reports  Regular review of reports and action there­ on.    Follow up Investigation of major lapses 16 Internal Audit  Includes checking, analyses, appraisals,  recommendations, advice and information  Regular or Need based 17 The internal auditor  Detects errors and frauds  Helps management correct errors and  minimize impact of frauds  Helps improve controls 18 Advantages of  Internal Audit  Keeps workers alert  Timely detection of errors & frauds  Enhances reliability of accounting and  supporting records  Reduces external audit work 19 Types of Internal Audits  Regular, continuous internal audit  Need based investigation  Pre­disbursement and post­payment audits 20 Risk Management Reporting  Audit Committee’s Report  Board’s Statement on Internal Controls 21 Audit Committee’s Report  List significance risks; how they are being  identified, assessed and managed  Report on effectiveness of the systems put in  place to manage these risks  List of actions being taken to remedy  significant weaknesses  Comment on need for greater monitoring of  procedures 22 Board’s Statement on Internal Control Essentially it is about status of internal controls, e.g  There is an ongoing process for identifying, evaluating  and managing significant risks  It is being regularly reviewed by the Board  It is in accordance with Turnbull Guidance 23 Turnbull Report  Risk Assessment  Control Environment  Control Activities  Information and Communication  Monitoring 24 Risk Assessment  Clear objectives, clearly communicated to all  concerned  Significant risks assessed regularly    Market risks Credit and liquidity risks Reputational risks, legal risks 25 Control Environment and Activities  Who controls? Are they independent?  Are controls/ authority/ responsibility/  accountability  defined?  Does company culture permit controls?  Demonstration of will to control  Communication to all concerned  How are adjustments made when needed? 26 Information & Communication  Frequency and adequacy of reports generated  by internal control system  Who receives what report at what intervals?  How reliable are these reports?  What checks are in place to ensure reliability  of these reports? 27 Monitoring 28 Conclusion Leaders have vital role in Risk Management 29 1-30 FACILITATOR Prof. Dr. Mohammad Majid Mahmood  ... affairs and accuracy of its records  Risk management is not just part of “protecting the assets of a company”, it is an  essential feature of proper conduct of its  affairs 11 Objectives of Internal Control  That the company pays only what should be ... Risk Assessment  Selection of risk management techniques  Implementation  Review Risk Identification  Risk profile of a company  Formal listing of all potential risks  External professional help ... The system should generate reports   Frequency of reports Adequacy of reports  Regular review of reports and action there­ on.    Follow up Investigation of major lapses 16 Internal Audit  Includes checking, analyses, appraisals,