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COURSE/UNIT INFORMATION
Course
MBA – UCAM
Course Level
Postgraduate
Module Name
Enterprise Risk Management
Awarding Body
CIQ/UCAM
Module Code
CIQGM730
Faculty
ASSIGNMENT INFORMATION
Full/ Part Assignment
Full
Assignment brief IV by
Dr. Vivek Mohan
Assessor
Assignment due date
Turnitin Class ID
31587022
Turnitin Enrolment Key
CIQGM701
TO BE FILLED BY THE STUDENT
Student Name
Student ID
Email ID
Date Submitted
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Executive Summary
This report discusses Enterprise Risk Management with special reference to General
Motors Corporation, a company that operates in the automobile industry, manufacturing and
selling gasoline and electric cars. The report introduces the role of safety management in
mitigating strategic, operational, and reputational risks that face organizations. Safety acts as a
watchdog that ensures firms comply with legal and compliance procedures covering workplace
safety, client safety, and product health safety, among others. In addition, safety management in
firms reduces risks by inculcating a safety culture in the wide organizational culture.
The report analyzes current issues that affect risk management in the automobile industry and
critiques traditional barriers that inhibit risk-based safety program implementation in
organizations. Some of discusses contemporary issues affecting risk management in the
automobile industry include high safety, security, and obsolescence standards. Traditional
barriers to risk-based safety measures include dichotomy in organizational structure, rigid
organizational culture, and conceptual difference between safety and risk management. Also, the
report discusses factors and trends imperative to General Motors' change. They include
aggressive competition, global workplace safety strategy, and bureaucracy to agility
organizational culture trends. The report also applies RMA's Enterprise Risk Management
framework in General Motors.
Additionally, the report develops a risk management plan containing six critical change
issues, including technology advancement, strategic risk management, corporate social
responsibility, and generic cost leadership strategy in human capital management. It also
discusses the relationship between the key change issues regarding implementation sequence to
achieve sustainable organizational change. Finally, the report provides a conclusion and
recommendations on areas General Motors can improve to promote enterprise risk management
and mitigate strategic, reputational, financial, and reputational risks.
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Introduction
Safety refers to the art and science devoted to recognizing, assessing, and controlling
stresses and factors in the workplace (Kontogiannis et al., 2019). It simply involves providing a
safe work environment. Safety in General Motors company plays a critical role in preventing or
reducing operational, reputational, and strategic risks. Operational risks relate to failed internal
processes, systems, and inadequate human capital in an organization. Typically, operational
failures emanate from systems failures, employee errors, fraud activities, non-compliance
activities, and events that disrupt organizational processes.
Strategic risks relate to unfortunate events associated with the long-term objectives of an
organization. Directors may fail in one way or another when formulating and implementing an
organization's fundamental goals, resulting in strategic risks (Kontogiannis et al., 2019). On the
other hand, reputational risk relates to the brand equity or overall image of an organization. In
general, reputational risk pose a danger or threat to the good image of a firm. Such risk may
occur due to company actions, employee operations, and third-party operations. Reputational
risks affect the safety issues and programs of a firm by creating a dented public image.
Safety in an organization incorporates occupational safety, meaning that safety is a
multidisciplinary field covering all organizational aspects (Álvarez-Santos et al., 2018). As a
result, safety compels safety professionals to identify and mitigate risks related to business
activities and may affect the health and wellbeing of employees, business associates, and the
public. Safety ensures safety managers coordinate and execute safety programs and
environmental health required by regulatory authorities and labor agencies.
In particular, safety mitigates strategic, operational, and reputational risks by acting as a
watchdog that ensures company compliances with policies and standards regarding stakeholder
safety and wellbeing (Álvarez-Santos et al., 2018). Also, safety ensures that organizations create
and embrace a safety culture, which goes far to mitigate reputational, operational, and strategic
risks. Safety culture mitigates such risks by ensuring that the organization and employees take
responsibility for actions that jeopardize safety. Directors and decision-makers in organizations
that embrace a safety culture ensure strategies and decisions consider safety, which helps reduce
strategic risks.
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Safety culture ensures organizational members understand safety programs, systems, and
procedures that reduce accidents at the workplace. For instance, a safety culture compels
organizations to provide a safe work environment, thus reducing accidents and risks that may
arise (Álvarez-Santos et al., 2018). Therefore, safety helps organizations mitigate risk by
ensuring compliance and avoiding financial losses from lawsuits and legal actions resulting from
non-compliance. Finally, risk and safety managers need to work collaboratively because safety
and risk management are related. It makes work easy to identify and prevent the occurrence of
events that may result in risks.
Literature Review
Current Issues in Risk Management in Automobile Industry
General Motors corporation operates in the automobile industry, manufacturing, and
marketing vehicles. GM's common brands include Pontiac, Buick, Chevrolet, Saturn, Saab,
Cadillac, and Hummer. Risk management is very critical in the automobile industry. It is crucial
because unaddressed risks result in safety incidents, missed production targets, and vehicle
recalls.
Current issues in the automotive industry related to risk management involve aging
assets, safety hazards, and security threats. These issues affect revenues, employees, plants,
vehicle quality, and the intellectual property of organizations operating in the industry (Banks et
al., 2019). Also, safety hazards, security threats, and aging assets issues in the automobile
industry expose companies to reputational risks as they can tarnish brand name and reputation.
Risk management in the automobile industry involves safety, quality, security, and obsolescence
compliances. Non-compliance with such issues erodes customer loyalty and trust.
Safety (focus on industrial safety programs)
Safety in the automobile industry relates to overall equipment effectiveness, contributing
to fewer workplace accidents and less unscheduled downtime. Companies view safety as an
additional burden that increases overall production cost, despite being critical in automotive
operations (Banks et al., 2019). Top performers in the automotive industry like General Motors
experience fewer workplace accidents as they uphold safety, which reduces risk exposure. The
best safety practices in the automobile industry relate to culture, capital, and compliance. The
industry compels automakers to shut down facilities when safety concerns are in play.
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Quality (Attain better visibility using manufacturing execution system)
Quality in the automotive industry is a critical issue in risk management. It can never be
sacrificed even when production targets are high than the workforce. To manage risks related to
quality, automakers require real-time information visibility (Banks et al., 2019). Technological
software like manufacturing execution systems is crucial among automakers to manage risks
associated with quality compliance. Quality compromises in the industry can lead to car recalls,
which affects the reputation of the company. For instance, General Motors recalled over 800,000
cars in 2014 due to a quality compromise with the ignition switch.
Obsolescence and security
Risk management in the automotive industry touch on software and equipment
obsolescence, which contributes to lost productivity and downtime. Financial and operational
risks resulting from obsolescence in the automotive industry are so high (Banks et al., 2019). As
a result, automakers tackle the issues of obsolescence by managing a proactive life-cycle
management. On security, the automotive industry requires automakers to conduct security
assessments to understand risk exposure and device mitigation techniques. A common technique
to manage security risks is defense-in-depth. It addresses security at physical, policy, network,
computer application, and device levels.
Critique on Traditional Barriers to Risk-based Safety Programs
Over the past few years, researchers have argued that there is a need to separate safety
programs from traditional compliance-based systems to risk-based programs (Bhupathi, 2016).
One way to switch from traditional compliance-based systems to risk-based systems is to create
risk management experts in organizations. In general, organizations should approach safety with
a mindset of risk management rather than compliance-based programs.
Today, organizations align safety programs with enterprise risk management, meaning
safety standards are geared towards a systematic and integrated risk management approach. As a
result, risks that face organizations are managed and controlled within an integrated framework
(Bhupathi, 2016). Some of the flaws or barriers of traditional compliance-based safety programs
include the belief that reducing accident frequency according to Heinrich's Injury Pyramid will
reduce the amount of harm.
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Another barrier is that potential risks or incidents should be treated equally without
periodizing one that carries significant severity (Bhupathi, 2016). Other barriers include blaming
workers for accidents, dependence on low-level control to manage incidents, and reactive instead
of proactive measures like incidents investigations and lagging indicators to assess the firm's
performance.
Compliance-based programs stress adherence to safety procedures and policies.
However, it does not mean that firms that adopt risk-based safety programs ignore compliance
functions because they are elements of the broader mission to manage and control organizational
risks (Bhupathi, 2016). Therefore, risk-based safety programs go beyond compliance procedures,
regulations, and policies. However, its application may be challenging due to certain traditional
barriers associated with:
1. Difference between safety and risk management
Safety management involves the use of policies, principles, framework, processes, and
measures to prevent incidents, accidents, and injuries that negatively impact a firm.
Organizations implement safety management guidelines and systems to keep the work
environment free from harm. In contrast, risk management relates to a systematic and integrated
approach to managing uncertainties that face an organization using an integrated framework.
It involves identifying, measuring, and prioritizing risks to coordinate and apply resource
economically in the process of minimizing, evaluating, and controlling the impact of unfortunate
events (Spadaccini, 2010). The disparity between the two concepts makes it difficult to apply
risk-based approaches to safety programs. However, organizations can utilize enterprise risk
management systems to manage the barrier.
2. Organizational culture
Typically, organization culture acts as a moderator of all organizational aspects. It
dictates what to accept and implement in an organization. Organizational culture represents who
and what the firm supports (Spadaccini, 2010). Therefore, it is not easy to implement risk-based
safety programs in organizations that do not embrace such a culture. However, this barrier is
manageable because organizations can use leadership to drive cultural change.
3. Organizational Structure
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Most organizational structures consider safety management as an operation function
under the control of the Chief Operations Officer. Similarly, such organizational structures
consider risk management as a finance function that the Chief Financial Officer should control
(Spadaccini, 2010). While managing risks, finance managers report to the treasurer or chief
financial officer.
On the other hand, operations managers report to the COO. The similarity of operations
and finance functions leaves safety managers hanging and confused because they cannot say to
the Chief Operations Officer (Spadaccini, 2010). This structural dichotomy makes it hard to
implement a risk-based approach to safety programs in organizations. However, separation of
function in organizations with such structures can permit the implementation of risk-based
approaches to safety programs.
Application of Theory to Practice
Factors and Trends that Define General Motors
In General Motors corporation, safety is the responsibility of every organizational
member. The company implements Speak Up for Safety Programs, encouraging suppliers,
business associates, employees, and dealers to report potential vehicle safety issues (Olson and
Wu, 2015). Some trends and factors affecting General Motors concerning implementing riskbased safety programs include stiff competition, organizational culture, and global workplace
safety strategy.
Global workplace safety strategy
General Motors implements a comprehensive global workplace safety strategy that
focuses on data, culture, knowledge, workplace safety systems, and risk mitigation dimensions in
promoting a safe work environment (Olson and Wu, 2015). The company believes that safety
begins with decisions that strengthen enterprise safety culture. One of the company's initiatives
to support the culture includes deep dive into safe decision making.
The knowledge dimension focuses on enhancing employees' ability to identify hazards
and risks in the work environment (Fraser et al., 2014). In general, the company sees the safety
of employees and customers as a number-one priority through the global workplace strategy.
This perception enables the company to gain a real-time understanding of the relationship
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between risks, safety procedures, and risk control issues. These factors encourage the
implementation of risk-based safety programs.
Increasing Competition
Globalization and growth in e-commerce expose General Motors to stiff competition,
which affects the company's prospects and overall financial performance (Fraser et al., 2014).
General Motors is among the leading automakers in the automobile industry with a strong image
and wide vehicle assortment. The company focuses on innovation, with Cruise being GM's
global segment that develops and commercializes autonomous vehicle technology. Despite
innovative efforts, General Motors face stiff competition from inte...