Risk Challenges 2
Risk Challenges
Abstract
Risks are common phenomena at all organizational levels and they have significant impacts
whenever they occur. Risks are simply situations that involve exposure loss or danger. They are
simply occurrences that are likely to have negative effects on systems, people, and assets. In this
case, the major focus is on the risks that affect organizations at enterprise levels. Therefore, this
discussion introduces some of the major and common risks that occur at enterprise levels and the
impact that they have on such organizations. The discussion also provides some of the major
roles of a strategic leader in dealing with such risks at an enterprise level. The discussion
integrates risk management and leadership theories to better understand the role of strategic
leaders in such instances. It also provides scriptural references on the role of leadership in
dealing with such risks. Also, the discussion provides a justification for why these roles of
strategic leaders are best suited to deal with the risks affecting the organizations at enterprise
levels. In addition, the discussion develops a risk management plan that can be implemented by
strategic leaders to deal with these risks. Finally, the discussion provides a summary of the
relationship between risk management, leadership theory, and the New Testament Scriptures,
specifically those that deal with the role of leadership.
Introduction
Risks at enterprise levels have detrimental impacts on processes within the organization and
leaders are required to implement strategic solutions to prevent further complications.
Organizations deal with three major risks at enterprise levels. One is the operational risks that
often affect the day-to-day activities of the organization. These are simply the hazards and
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uncertainties that organizations face as they try to accomplish their day-to-day operations within
a given industry or field. They are also the type of risks that are associated with the decisions
made by individuals within the organization and they often result in lowered production, failure,
and high costs (Araz et al., 2020). For instance, an organization might lack a specific skilled
workforce needed to address challenges such as cyber threats. Similarly, an organization might
be dealing with a shortage of labor to deal with day-to-day operations in peak seasons. Financial
risks are also common in most organizations at enterprise levels and they often have significant
impacts on the short and long-term processes within these organizations. These are simply the
types of risks that involve the organization losing money on an investment decision or business.
As a result, the organization experiences multiple losses that impact the short and long-term
processes. These might include risks such as liquidity and credit that affect the financial strength
of the organization. Cases of financial risks always result in the organization’s cash flow failing
to satisfy the obligations of the organization. financial risks are also encountered within the
market caused by market forces such as high competition, movement in the stock prices, rates of
interest, and volatility risks among others. Financial risks affect the ability of the organization to
get involved in internal and external processes that contribute to its growth.
Strategic risks are also common risks that affect organizations at enterprise levels making it hard
for them to achieve their short and long-term goals. These are simply the external and internal
events that make it impossible or hard for the organization to achieve its strategic goals within a
certain duration. In most cases, strategic risks tend to have significant impacts on the
organization and would lead to its eventual downfall. They are simply the kind of risks that occur
alongside the financial and operational risks and they tend to threaten the ability of the
organization to implement its key strategies for success. For instance, competitive risks are
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examples of strategic risks and they tend to occur whenever an organization falls behind its
competitors in the products or services they provide to their clients. Such a risk leads to loss of
clients and would lead to the eventual downfall of the organization. Regulatory risks are also
other examples of strategic risks that often affect organizations at enterprise levels. Such kinds of
risks often disrupt the business, create new responsibilities that require the organization to incur
heavy costs to deal with, demand new resources such as technologies needed to enhance the
provision of services, and often cause distraction among business leaders. Regulatory risks tend
to affect the efforts of organizations in penetrating new markets affecting their growth.
Therefore, looking at these risks at enterprise levels, one realizes that leaders have a critical role
in dealing with these risks as a way of preventing further impacts on people and processes. This
discussion will look into the role of strategic leaders in dealing with such risks while integrating
leadership and risk theories.
Role of the Strategic Leader
Leaders play a significant role in risk management within these organizations and their efforts
and actions determine how well the risks are mitigated. According to the leadership theory, a
person is considered a leader or becomes a leader because of their efforts, characteristics, and
personalities while dealing with a pressing situation. This means that a leader can either be born
or made. That is, an individual born with natural traits of leadership such as delegation and focus
can be considered to be a leader. Similarly, an individual who has been exposed to various
situations that required them to make strategic decisions to deal with these situations is
considered a leader who is made. Therefore, one of the major roles of leadership in risk
management is active participation in the risk management processes (Silva et al., 2021). That is,
the time a leader dedicates to dealing with a certain risk at enterprise levels determines how
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effectively the risk management process will be conducted. This is most common with
transformational leaders who get involved with processes within the organization. they simply
set expectations for their team and motivate them to identify and address risks within the
enterprise levels of the organization. Involvement with risk management not only signifies the
commitment of the leader to the well-being of the organization but also signifies the importance
of the risk management process. Such a leader makes use of tools such as technology and skills
from their team members to identify, analyze, and mitigate a certain risk that would have
significant impacts on the organization. most team members tend to trust leaders who are
actively involved in the processes of the organization making it easy to address such risks.
The Bible in the New Testament of Luke chapter twenty-two verse twenty-six states that the
greatest among people is one who lives like the smallest and one who rules like the one who
serves. That is any individual who wants to be considered great needs to be humble and not
consider themselves to be of greater importance than the people they serve. This simply demotes
servant leadership which fosters collaboration. Therefore, another major role of such a leader in
dealing with risks is enhancing collaboration among their team to ensure that such risks are
addressed and mitigated. Collaboration can be enhanced internally or externally depending on
the type of risk affecting the organization. For instance, in most cases, operational risks are
caused by internal factors and tend to affect internal processes causing significant impacts on the
organization (Arfiansyah, 2021). This means that how such a leader addresses these risks
determines how well the risks are mitigated. By enhancing collaboration among people and
processes within the organization, such risks are mitigated easily. Also, other risks such as
financial risks can be caused by external factors such as changes in the market forces. Enhancing
collaboration with other organizations in the same market helps such leaders mitigate risks that
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would affect the organization at an enterprise level. Promoting a collaborative attitude among
people and other organizations is one of the critical ways of dealing with such risks and depicts
the strength of a leader. It simply denotes a leader who is transparent and is concerned with the
well-being of the organization as well as that of their employees.
According to the risk theory, a framework is provided for identifying and mitigating risks that
affect the internal and external processes of an organization. The risk theory also provides ways
and strategies in which people can anticipate risks and use their skills and expertise as well as
tools to deal with such risks. The risk theory is simply founded on the principles of identification
which is simply to identify certain risks at the enterprise level of an organization, assessment
which is simply to determine the impact or extent of the risk and mitigation which is simply to
come up with strategies to deal with these risks. Therefore, according to the risk theory, strategic
leaders are key in dealing with the risks that affect their organization. Strategic leaders will
consult with experts from diverse backgrounds and generate varying opinions about risks (Silva
et al., 2021). Through such interactions, they get to use the knowledge obtained to engage in risk
management practices. Such collaborations also prompt strategic leaders to work with other
leaders from other departments or organizations in their industry to achieve risk management
practices in the organization.
Analysis of the Argument Strength
One of the main reasons why such arguments on the roles of strategic leaders have been made is
because of trust. That is, such leaders often have the trust and confidence of their followers and
team members to identify, assess, and mitigate a certain risk affecting the organization at an
enterprise level. This means that they can make use of their influence to motivate and encourage
their followers to implement strategies that would deal with the risks affecting the organization.
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Also, leaders are placed in positions of power because they have unique qualities and elements
that distinguish them from their followers. For instance, they have more experience or expertise
in their fields which makes them more qualified to lead their team members or followers. This
means that such qualities and expertise will play a critical role in risk management (Silva et al.,
2021). They will make use of these qualities to not only identify, assess, and mitigate risks but
also educate their followers on the need to prepare for such risks in the future. Their unique skills
make their followers trust them more such that in case of a risk occurrence, they will always
depend on the direction and guidance of these leaders to deal with the risky situations.
Leadership is also acknowledged as a privilege to serve by the Bible which means that leaders
are placed in that position to serve the interests of the organization and its people. This means
that in case a risky situation occurs, they are mandated to serve and come up with strategies that
help address these situations making them more qualified compared to their followers.
Risk Management Plan
The following risk management plan will be useful to strategic leaders in dealing with risks
affecting their organization at enterprise levels:
a. Identifying Risks
This is the first and most critical step in the risk management plan and it simply involves the
strategic leader using tools, equipment, and skills as well as expertise to identify specific risks
affecting the organization at enterprise levels. It simply helps them get prepared for what is to
come by having basic and advanced knowledge of the risk they will be dealing with. Identifying
risks requires the strategic leader to break down the big picture because of the multi-faceted
nature of risks. That is, risks are numerous and their effect in the organization can be great which
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means that the leader first needs to break them down into a specific category that can be
addressed easily. Asking the right questions will make it easy for the strategic leader to identify
the nature of the risk and prompt them to come up with better ways of dealing with these risks.
Identifying risks can also be conducted through internal research and consultancy among other
leaders. Employee feedback will also make it easy for the strategic leader to identify the risk
(Bondarenko et al., 2021).
b. Risk assessment
This is simply the process where the strategic leader determines the extent of the risk and the
impact that it would have if it occurred in the organization. Strategic leaders will determine the
specific impacts that would be felt and the specific people who would be affected (Bondarenko et
al., 2021). A good example is financial losses that would occur in an organization if processes
such as the supply chain are affected in an organization. By determining who or what might be
affected by the risk and how such effects would occur, it will become easy to come up with a
plan to deal with the risks. The strategic leader has to record their findings and review the
assessments. They can also share with other leaders in the organization as well as make any
necessary updates on the assessment report to ensure that they are well-prepared for the risks.
c. Minimize/Eliminate the Risks
This is also a critical process in the risk management plan and it helps reduce the impacts of the
risks on the organizational processes. Minimizing risks requires the strategic leader to facilitate
risk avoidance where all employees within the organization are required to avoid engaging in
processes that would cause the risks to occur. The strategic leader can also transfer the risks to
other less risky processes within the organization as a way of distributing the impact. The
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strategic leader can also enhance loss reduction to ensure that the impacts caused by the risks are
minimized and effects on major processes within the organization are protected. Minimizing
these risks will ensure that the organization reduces the impacts as they work on coming up with
a permanent solution to deal with them (Bondarenko et al., 2021).
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d. Assigning Responsibility/Tasks
This is also another critical step in the risk management plan and it involves the strategic leader
delegating duties to their team members to deal with the risks. That is, having identified the
specific risk that affects the organization, the strategic leader assigns responsibilities or tasks to
their team members who help address key components of the risks at a strategic level. For
instance, an operational risk affecting the staff within the organization can be delegated to the
human resource manager, communications team, and other key individuals to help identify the
specific cause of the risk and give suggestions for ways to handle these risks. Assigning
responsibility and tasks minimizes the burden on the strategic leader in dealing with the risks and
also ensures that they obtain suggestions from other people on how such risks can be handled
(Bondarenko et al., 2021).
e. Contingency Plans
Having dealt with the risk is not the final solution to the problem and the likelihood of such risks
occurring again is high. This means that the strategic leader has to come up with contingency
plans that will help reduce the likelihood of such risks occurring again. Contingency plans such
as training the employees to identify and report risks will ensure that the organization is safe
from such risks in the future. Contingency plans also show the commitment of the strategic
leader to solving challenges affecting the organization's well-being.
f. Continuous Monitoring
This is the final step in the risk management plan and it involves the strategic leader ensuring
that together with their team, they constantly monitor for new risks. This will ensure they are
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prepared early enough for the risks preventing any significant impact on the organizational
processes.
Risk Management, Leadership Theory, and New Testament Scripture
As previously noted, the relationship between these elements is founded on the role of the
strategic leader in dealing with organizational risks occurring at enterprise levels. Risk
management is simply the process that helps identify, evaluate, analyze, and address risks within
the organization to prevent any significant impact. These are simply the processes that help
minimize losses within the organization and ensure that all processes run smoothly (Samimi
2020). On the other hand, the leadership theory is focused on the efforts of the leader in dealing
with challenging situations in their areas of leadership. This means that they get to use their skills
and knowledge to deal with risks occurring in the organization. the New Testament Scripture
focuses on the nature and qualities of a leader in dealing with challenging situations. For
instance, a leader is expected to be courageous but humble enough to lead their people. This
means that such qualities would play a critical role in identifying and minimizing risks that affect
the organization at enterprise levels. This explains the relationship between these concepts and
the role they play in minimizing risks affecting the organization at enterprise levels.
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