Business Process: An Enabler of Risk Management

Presently the level of risk required the organization to align business processes and strategies regularly. The level of responsiveness needs the careful alignment of management, methods, technology, and tools. As an enable, the Business Process Management paradigm captures the affecting technologies and business processes. Value creation is the most critical business activity. The business process is responsible for revealing any possible business interruption, including contextualizing the different interactions and sources of incidents. Therefore, the paradigm subjected the business process to the same quality requirement as material and human resources.

From the perspective of Industrial Engineering, aligned goal and performance compared to value creation. On the other side, the administration, the business process, is the primary unit of analysis, which required understanding to attain value creation. Generally, proponents of enterprise risk management advocated risk management in the context of the business process.

Observably, process management improves responsiveness, and risk management gives strength to the decision. Adding the management process increases the ability of the business to attain objectives despite incidents. The outcome of integrating the business process is a more reliable firm able to withstand changes in the external environment. A robust management process assists the firm in the successful pursuit of goals even during required modifications such as more regulation, increase competition, and higher bargaining power of suppliers, which automatically required business adjustments.

The Failure Modes, Effects, and Criticality Analysis (FMECA), a popularly known risk analysis technique, is a tool used to evaluate technical systems and its effect on the systems. However, FMECA has its limitations, such as the tendency to focus on a single casual event, absence of human element considerations, negative perception of risk, the result of the evaluation depends on the assumed operational mode of the system. Since the method focuses only on events, it emphasizes singly on internal analysis.

Moreover, FMECA is a general-purpose method that required adding particularity associated with risk in the business process settings. In the case of business, process risk is assumed as the chance that an error will result in undesirable consequences. Thus the error is the essential component of risk in a business process. Adding of uncertainty in the process model is planning between process-based error and risk. The systematic approach is a technique to comprehend the probable process level errors and the accompanied undesirable consequences.

Failure modes are the result of errors. Focusing on process risk with a high level of awareness on potential failure caused by error is comparable to the FMECA approach. A business trying to achieve its objectives needs to support the management in harmonizing prospect and variation to organize resources to attain business goals. By all means, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) recommended a cohesive Enterprise Risk management (ERM) composed of several control objectives and administrative components. The framework is based on various levels of concept. With an industrial structure in mind, the COSO wanted an outline easily substantiated and occupied with tools to support specific business cases. Conspicuously, the framework did not furnish facilities for modeling, although experts are recommending theoretical foundations and modeling tools to overcome its deficiencies.

According to several studies, there are three approaches. An approach concentrating exclusively on risk management is called a risk centered approach. A process-oriented approach is a risk arising from ignoring the association between the concept and lifecycle of both processes, which calculated risk from modeling and information. It is possible to provide tools for analysis of the association between risk and process through the class of industrial framework. Nonetheless, in the context of business risk are complicated due to the following:

· Risk encompasses several firms' and units' objectives.

· Risk has multiple effects on a firm objective.

· Risk has various indicators contingent on the level of concept.

In reality, particular business context shapes business events and depend on the seminal, physical, even rational relation who differ with time, space, and stakeholders. Moreover, managing risk at the business level suggests process change with consequences to another process. The expected intricacy of business risk causes risk management to be a difficult task, which entails methods and systems to master the complexities.