Question One
Risk monitoring is essential in identifying changes in an already identified risk as well as noticing emerging risks. In most businesses, shifts in a risk profile are slow and usually result from changes in business operations (Stulz, 2009). In some companies like financial firms, changes in risks are rapid and require constant monitoring. It is the responsibility of risk monitors to capture variation in risk characteristics as they happen. Failure to identify changes in the risk status and adjusting treatment in real time can be detrimental to a company. It can result in improper treatment of uncertainties leading to losses.
Risk maintenance and treatment involves choosing and adopting measures that reduce or decrease the impacts of a risk to a business enterprise. Different risks are managed differently depending on their severity. Mistakes in assigning risk management option to a risk result in failures in keeping the risk in check. For instance, if a business owner chooses to avoid compliance conditions, breaches in compliance requirements can result in legal problems. Thus, affecting the running of the enterprise.
Risk assessment is a helpful tool in comprehending the potential outcomes of various uncertainties in the business world. According to PricewaterhouseCoopers (PwC) (2015), risk assessment should be disciplined, continuous, and outcome-focused. Failure to effectively communicate the results of risk assessment results in a deficient understanding of uncertainties. Timely debrief of risk evaluation results are critical in formulating appropriate intervention plans (PwC, 2015). Risk managers and policy makers need to understand risk evaluation reports so as to make necessary actions. Complex and technical risk management systems have been associated with operation crisis due to data distortion or late communications (Stulz, 2009).
Question Two
Leadership and supervision are management concepts that are interrelated. Despite their many similarities, the two concepts are different. Supervisors have formal job titles and roles which include monitoring, overseeing, directing, and providing feedback on the performance of staff. Leaders, on the other hand, can be official or informal. Formal leadership involves management roles while informal leadership involves motivating others in the absence of a management position. Supervision comes with power and authority over subordinates while leadership does not necessarily require others to follow. In essence, effective supervisors have excellent leadership skills while leaders need not have good supervision skills.
There are about six theories of leadership. The trait approach puts an emphasis on the qualities that leaders possess while behavioral philosophies define leadership based on the specific behaviors of leaders such as an authoritarian tendency (Chakrabarti, 2014). Contingency theories describe leadership as a combination of traits, behaviors, and contextual factors that contribute to success while the charismatic approach defines leadership as authority that is based on vision, charisma, empathy and empowerment while transactional leadership involves the use of rewards and punishment to control performance (Chakrabarti, 2014).
Transformational leadership involves inspiring and motivating followers towards a shared goal by combining a vision and personality traits. I believe this definition best describes leadership because it encompasses the role of a leader as a person who inspires change through motivation (Chakrabarti, 2014). Transformational leaders need not be authoritative because a shared vision keeps the followers motivated to work towards the common goal. In the end, everyone feels valued and cared for; thus, they are stimulated to meet the common objectives and achieve personal growth at the same time. Transformational leaders often align personal goals to those of the organization so that individual followers and the organization grow in a simultaneous manner.
References
Chakrabarti, B. (2014). 6 leadership theories to define effectiveness of leaders. Retrieved April 4, 2016, from https://prepforum.wordpress.com/2014/12/06/6-leadership-theories/
PricewaterhouseCoopers (2015, Feb). How to Achieve Excellent Enterprise Risk Management. Retrieved April 4, 2016, from http://www.pwc.com/us/en/risk-assurance/publications/assets/preventing-erm-risk-assessment-failure.pdf
Stulz, R. M, (2009, March). Six Ways Companies Mismanage Risks. Harvard Business Review.
