The Embedment of Risk Management in Enterprise Management System

1 Source: GPW spółki, https://www.gpw.pl/spolki (Access: 25.06.2019 and 10.09.2021).

1 Source: the author’s own work.

1 Explanation (to Table 2):

Strategic management:

1 – integration of risk management processes with business decision-making processes (i.e., taking risk into account in a business strategy and strategic objectives)

2 – continuous monitoring of the market and competitors’ behavior

Operational management:

1 – collection of data on events, losses, and abuses supported by an IT system and scenario analyses, attestations, review and audit reports, managerial reporting

2 – continuous measurement, assessment and monitoring of operational risks using quantitative and qualitative metrics

3 – functioning of the internal control system

4 – a policy of low tolerance for operational losses, including the setting of limits for risk appetite, tolerance, and exposure

5 – keeping abreast of changes in current legislation, as well as recommendations and guidelines from national and European Union supervisory institutions

6 – developing, implementing, and maintaining policies and procedures for operational risk management activities

Financial management:

1 – application of risk valuation (rating, scoring) models adapted to the customer segment, type of product and transaction, rules for establishing and monitoring legal collaterals for credits

2 – continuous process of receivables monitoring and collection

3 – continuous assessment of counterparty credibility and customer creditworthiness, taking into account, among other things, a detailed analysis of the exposure repayment source

4 – establishment of a policy for the use of hedging instruments and ongoing assessment of their reliability (including the use of hedging accounting)

5 – establishment and monitoring of risk concentration limits and risk diversification

6 – monitoring of early warning signs, stress testing, historical analysis, validation testing, and sensitivity analysis

7 – regular monitoring of the credit portfolio (control of all important credit risk parameters)

8 – creation of write-downs (protection against impairment), as well as limits, provisions and capital buffers

9 – limiting exposure to the market risk (including the use of the parametric VaR model) and liquidity risk through a system of limits, liquidity buffers, and contingency funding plans

10 – limiting potential losses from changes in market interest rates and currency exchange rates through appropriate structuring of balance sheet and off-balance sheet items

11 – restrictive procedures for products/services provided on preferential terms, including “forbearance” practices

12 – use of insurance cover

Quality management:

1 – monitoring the quality and compliance of offered products and services (including the ongoing handling of customer complaints and claims and the development of an external communication strategy to continuously monitor customers’ needs and expectations regarding the quality and parameters of products and services)

Human resource management:

1 – existence of separate units/job positions in the organizational structure responsible for managing specific risks and preventing abuses

2 – continuous monitoring of employees’ compliance with ethical principles and a culture of commitment

3 – an advanced human resource policy (concerning recruitment, appraisal, development, remuneration, and retention of staff) limiting the risk of incompetence and errors

Investment management:

1 – hedging of capital market transactions (including overall exposure limits)

2 – a dividend policy implemented in line with the prudent management principle and regulatory requirements

Innovation management:

1 – continuous improvement of IT tools and technological solutions to ensure the security of enterprise information on itself, its customers, and business partners, as well as the security of its transactions

1 Source: the author’s own work.

1 Explanation (to Table 3):

Strategic management:

1 – ongoing monitoring of the market, the economic situation in the country, the behaviors of competitors, as well as announcements of public and non-public procurement procedures

2 – building lasting relations with customers based on partnership and taking care of the quality of provided services

3 – cooperation with well-established contractors and suppliers with proven creditworthiness

4 – continuous efforts to attract new customers/win contracts, including monitoring customers’ needs and expectations and expanding business into foreign markets

Operational management:

1 – continuous analysis, review, and improvement of risk identification mechanisms and monitoring of risk exposure

2 – definition of a maximum acceptable risk limit and its ongoing control

3 – keeping abreast of changes in current legislation and the requirements of supervisory institutions

4 – observing restrictive conditions of cooperation with suppliers, subcontractors, and other entities of the supply chain in order to spread the risk of transactions in a way that maximizes the company’s security, for example, through insurance and bank guarantees, cash deposits, etc.

5 – cyclical training in occupational health and safety, fire safety, and environmental protection to maximize the reduction of the possibility of accidents at work, technical infrastructure failures, and environmental damage

Financial management:

1 – acceptance of orders ensuring a positive margin (refraining from participation in procurement procedures in which entities offering services below the cost of providing them are selected)

2 – performance of long-term, fixed-price, high-unit-value contracts as well as operational agreements to reduce the seasonality of revenues

3 – monitoring cash flows from each contract and matching inflows and outflows over time (individual cost valuation, analytical account, and budget for each contract)

4 – entering into contracts with subcontractors and suppliers expressed in the contract currency (natural hedging)

5 – application of insurance cover and “force majeure” clauses and other safeguards in contracts in order to limit financial losses resulting from contractual penalties and damages for non-performance or improper performance of a contract

6 – diversification of revenue sources (contractors and suppliers of materials and equipment)

7 – debt collection measures aimed at insolvent customers and contractors

8 – monitoring the risk of lack of funds by means of a periodic liquidity planning tool (taking into account the timeliness and amounts of receivables collection) and securing liquidity by maintaining access to a credit line and guarantee limits

Quality management:

1 – a policy of continuous improvement of the quality of provided services and products

2 – strict compliance with technical procedures related to the quality of contract performance and compliance with procedures contained in internal or external norms and standards, including ISO standards

Human resource management:

1 – an advanced human resource policy (concerning recruitment, appraisal, development, remuneration, and retention of staff) limiting the risk of incompetence, errors, and loss of key employees

Investment management:

1 – use of financial instruments, particularly by entering into forward hedging transactions, currency options, and fixed interest rate derivatives (IRS, CIRS)

Innovation management:

1 – continuous improvement of IT tools and technological solutions to ensure the security of enterprise information on itself, its customers and business partners, as well as the improvement of offered products and services

Project management:

1 – offering comprehensive solutions to reduce the risk of lack of integrity and synchronization in the management of construction projects, including continuous monitoring of the quality and progress of project work

2 – individual project management procedures for each contract

1 Source: the author’s own work.

1 Explanation (to Table 4):

Strategic management:

1 – continuous monitoring of the IT and telecommunications market, the economic situation in the country, and the behavior of competitors

2 – continuous efforts to strengthen the company’s position in the domestic market by winning new contracts and expanding into global markets

3 – implementation of procedures related to tenders for providing infrastructure and IT solutions for the public sector

4 – cooperation with partners with an established position on the market and proven creditworthiness

5 – tracking demand for IT products and services in order to respond flexibly to changing trends

Operational management:

1 – keeping abreast of changes in current legislation

2 – diversification of suppliers of specialized IT hardware, software, and solutions, as well as efforts to diversify customer/recipient groups

3 – procedures in place to deal with failures of hardware, software, IT systems, etc. to prevent downtime and failure to fulfil accepted orders

Financial management:

1 – ongoing monitoring of the degree of indebtedness and ability to fulfil obligations and negotiation of interest rates with lending banks

2 – application of insurance cover, as well as relevant clauses and other safeguards in contracts (including licences and concessions) in order to limit financial losses due to contractual penalties or termination of software use license agreements

3 – monitoring the timeliness of transfers made by customers and, if necessary, taking debt collection measures

Quality management:

1 – continuous improvement of the quality of offered products and services through, among other things, ongoing capital expenditure and development work

Human resource management:

1 – an advanced human resource policy (concerning recruitment, appraisal, development, remuneration, and retention of staff) limiting the risk of incompetence, errors, and loss of key employees

Project management:

1 – application of world-standard methods for estimating costs of projects, establishing deadlines, and estimating risks that may jeopardize the timely, substantive, or financial completion of project tasks

Investment management:

1 – use of financial instruments (e.g., futures contracts) to hedge against adverse movements in interest rates and currency exchange rates

Innovation management:

1 – continuous improvement of IT tools to ensure security of confidential information and prevent infringement of third parties’ intellectual property rights

2 – a policy of continuous development of implemented IT innovations, solutions, equipment, and technologies