Defining Risk Management Capabilities And How Risk Maturity Model

1998 Words Jan 19th, 2015 8 Pages
This essay would start by defining risk management capability and how risk maturity model can be used to assess and enhanced an organisation risk management capability. Then it will go on and discuss the importance of enterprise risk management and discuss the role of chief executive risk officer.
It is important to know how to define risk management capability. (Hillson, 1997) developed a risk maturity model for organisation to assess their current maturity, identifying new ways of improvement of risk management capability. There are four levels of risk maturity which are Naïve (level 1), Novice (level 2), Normalised (level 3) and Natural (level 4). The description of risk management maturity level are as follow.
Naïve : "Unaware of the need for management of risk, and has no structured approach to dealing with uncertainty." and "with little or no attempt to learn from the past or to prepare for future threats or uncertainties." (Hillson, 1997).
Novice: Starting to experiment risk management process with small numbers of individuals. Become aware of potential benefits of managing risks but not implementing the risk process and not gaining full benefits. (Hillson, 1997)
Normalised: Risk management process is formalised and implemented to most or all projects. Benefits are understood at all level or organisation but may not be constantly achieved in all cases. (Hillson, 1997)
Natural: Has a "risk-aware culture, with a proactive approach to risk management in all aspects of…

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