Knowledge management applied to enterprise risk management

Risk and knowledge are two concepts and components of business management which have so far been studied almost independently. This is especially true where risk management (RM) is conceived mainly in financial terms, as for example, in the financial institutions sector. Financial institutions are affected by internal and external changes with the consequent accommodation to new business models, new regulations and new global competition that includes new big players. These changes induce financial institutions to develop different methodologies for managing risk, such as the enterprise risk management (ERM) approach, in order to adopt a holistic view of risk management and, consequently, to deal with different types of risk, levels of risk appetite, and policies in risk management. However, the methodologies for analysing risk do not explicitly include knowledge management (KM). This research examines the potential relationships between KM and two RM concepts: perceived quality of risk control and perceived value of ERM. To fulfill the objective of identifying how KM concepts can have a positive influence on some RM concepts, a literature review of KM and its processes and RM and its processes was performed. From this literature review eight hypotheses were analysed using a classification into people, process and technology variables. The data for this research was gathered from a survey applied to risk management employees in financial institutions and 121 answers were analysed. The analysis of the data was based on multivariate techniques, more specifically stepwise regression analysis. The results showed that the perceived quality of risk control is significantly associated with the variables: perceived quality of risk knowledge sharing, perceived quality of communication among people, web channel functionality, and risk management information system functionality. However, the relationships of the KM variables to the perceived value of ERM are not identified because of the low performance of the models describing these relationships. The analysis reveals important insights into the potential KM support to RM such as: the better adoption of KM people and technology actions, the better the perceived quality of risk control. Equally, the results suggest that the quality of risk control and the benefits of ERM follow different patterns given that there is no correlation between both concepts and the distinct influence of the KM variables in each concept. The ERM scenario is different from that of risk control because ERM, as an answer to RM failures and adaptation to new regulation in financial institutions, has led organizations to adopt new processes, technologies, and governance models. Thus, the search for factors influencing the perceived value of ERM implementation needs additional analysis because what is improved in RM processes individually is not having the same effect on the perceived value of ERM. Based on these model results and the literature review the basis of the ERKMAS (Enterprise Risk Knowledge Management System) is presented.

Organisational learning - a critical systems thinking discipline

Original Paper European Journal of Information Systems (2001) 10, 135–146; doi:10.1057/palgrave.ejis.3000394 Organisational learning—a critical systems thinking discipline P Panagiotidis1,3 and J S Edwards2,4 1Deloitte and Touche, Athens, Greece 2Aston Business School, Aston University, Aston Triangle, Birmingham, B4 7ET, UK Correspondence: Dr J S Edwards, Aston Business School, Aston University, Aston Triangle, Birmingham, B4 7ET, UK. E-mail: j.s.edwards@aston.ac.uk 3Petros Panagiotidis is Manager responsible for the Process and Systems Integrity Services of Deloitte and Touche in Athens, Greece. He has a BSc in Business Administration and an MSc in Management Information Systems from Western International University, Phoenix, Arizona, USA; an MSc in Business Systems Analysis and Design from City University, London, UK; and a PhD degree from Aston University, Birmingham, UK. His doctorate was in Business Systems Analysis and Design. His principal interests now are in the ERP/DSS field, where he serves as project leader and project risk managment leader in the implementation of SAP and JD Edwards/Cognos in various major clients in the telecommunications and manufacturing sectors. In addition, he is responsible for the development and application of knowledge management systems and activity-based costing systems. 4John S Edwards is Senior Lecturer in Operational Research and Systems at Aston Business School, Birmingham, UK. He holds MA and PhD degrees (in mathematics and operational research respectively) from Cambridge University. His principal research interests are in knowledge management and decision support, especially methods and processes for system development. He has written more than 30 research papers on these topics, and two books, Building Knowledge-based Systems and Decision Making with Computers, both published by Pitman. Current research work includes the effect of scale of operations on knowledge management, interfacing expert systems with simulation models, process modelling in law and legal services, and a study of the use of artifical intelligence techniques in management accounting. Top of pageAbstract This paper deals with the application of critical systems thinking in the domain of organisational learning and knowledge management. Its viewpoint is that deep organisational learning only takes place when the business systems' stakeholders reflect on their actions and thus inquire about their purpose(s) in relation to the business system and the other stakeholders they perceive to exist. This is done by reflecting both on the sources of motivation and/or deception that are contained in their purpose, and also on the sources of collective motivation and/or deception that are contained in the business system's purpose. The development of an organisational information system that captures, manages and institutionalises meaningful information—a knowledge management system—cannot be separated from organisational learning practices, since it should be the result of these very practices. Although Senge's five disciplines provide a useful starting-point in looking at organisational learning, we argue for a critical systems approach, instead of an uncritical Systems Dynamics one that concentrates only on the organisational learning practices. We proceed to outline a methodology called Business Systems Purpose Analysis (BSPA) that offers a participatory structure for team and organisational learning, upon which the stakeholders can take legitimate action that is based on the force of the better argument. In addition, the organisational learning process in BSPA leads to the development of an intrinsically motivated information organisational system that allows for the institutionalisation of the learning process itself in the form of an organisational knowledge management system. This could be a specific application, or something as wide-ranging as an Enterprise Resource Planning (ERP) implementation. Examples of the use of BSPA in two ERP implementations are presented.

A simulation of a workflow management system

Suggests that simulation of the workflow component of a computer supported co-operative work (CSCW) system has the potential to reduce the costs of system implementation, while at the same time improving the quality of the delivered system. Demonstrates the value of being able to assess the frequency and volume of workflow transactions using a case study of CSCW software developed for estate agency co-workers in which a model was produced based on a discrete-event simulation approach with implementation on a spreadsheet platform.

Using process mapping and business process simulation to support a process-based approach to change in a public sector organisation

A case study demonstrates the use of a process-based approach to change regarding the implementation of an information system for road traffic accident reporting in a UK police force. The supporting tools of process mapping and business process simulation are used in the change process and assist in communicating the current process design and people's roles in the overall performance of that design. The simulation model is also used to predict the performance of new designs incorporating the use of information technology. The approach is seen to have a number of advantages in the context of a public sector organisation. These include the ability for personnel to move from a traditional grouping of staff in occupational groups with relationships defined by reporting requirements to a view of their role in a process, which delivers a performance to a customer. By running the simulation through time it is also possible to gauge how changes at an operational level can lead to the meeting of strategic targets over time. Also the ability of simulation to proof new designs was seen as particularly important in a government agency were past failures of information technology investments had contributed to a more risk averse approach to their implementation. © 2004 Elsevier Ltd. All rights reserved.

Knowledge management in a New Zealand tree farming company:Ambiguity and resistance to the "technology solution"

Purpose - Managers at the company attempt to implement a knowledge management information system in an attempt to avoid loss of expertise while improving control and efficiency. The paper seeks to explore the implications of the technological solution to employees within the company. Design/methodology/approach - The paper reports qualitative research conducted in a single organization. Evidence is presented in the form of interview extracts. Findings - The case section of the paper presents the accounts of organizational participants. The accounts reveal the workers' reactions to the technology-based system and something of their strategies of resistance to the system. These accounts also provide glimpses of the identity construction engaged in by these knowledge workers. The setting for the research is in a knowledge-intensive primary industry. Research was conducted through observation and interviews. Research limitations/implications - The issues identified are explored in a single case-study setting. Future research could look at the relevance of the findings to other settings. Practical implications - The case evidence presented indicates some of the complexity of implementation of information systems in organizations. This could certainly be seen as more evidence of the uncertainty associated with organizational change and of the need for managers not to expect an easy adoption of intrusive IT solutions. Originality/value - This paper adds empirical insight to a largely conceptual literature. © Emerald Group Publishing Limited.

People, technology, processes and risk knowledge sharing

The present global economic crisis creates doubts about the good use of accumulated experience and knowledge in managing risk in financial services. Typically, risk management practice does not use knowledge management (KM) to improve and to develop new answers to the threats. A key reason is that it is not clear how to break down the “organizational silos” view of risk management (RM) that is commonly taken. As a result, there has been relatively little work on finding the relationships between RM and KM. We have been doing research for the last couple of years on the identification of relationships between these two disciplines. At ECKM 2007 we presented a general review of the literature(s) and some hypotheses for starting research on KM and its relationship to the perceived value of enterprise risk management. This article presents findings based on our preliminary analyses, concentrating on those factors affecting the perceived quality of risk knowledge sharing. These come from a questionnaire survey of RM employees in organisations in the financial services sector, which yielded 121 responses. We have included five explanatory variables for the perceived quality of risk knowledge sharing. These comprised two variables relating to people (organizational capacity for work coordination and perceived quality of communication among groups), one relating to process (perceived quality of risk control) and two related to technology (web channel functionality and RM information system functionality). Our findings so far are that four of these five variables have a significant positive association with the perceived quality of risk knowledge sharing: contrary to expectations, web channel functionality did not have a significant association. Indeed, in some of our exploratory regression studies its coefficient (although not significant) was negative. In stepwise regression, the variable organizational capacity for work coordination accounted for by far the largest part of the variation in the dependent variable perceived quality of risk knowledge sharing. The “people” variables thus appear to have the greatest influence on the perceived quality of risk knowledge sharing, even in a sector that relies heavily on technology and on quantitative approaches to decision making. We have also found similar results with the dependent variable perceived value of Enterprise Risk Management (ERM) implementation.

CORD an object model supporting statistical summary information for management decision making

Information systems have developed to the stage that there is plenty of data available in most organisations but there are still major problems in turning that data into information for management decision making. This thesis argues that the link between decision support information and transaction processing data should be through a common object model which reflects the real world of the organisation and encompasses the artefacts of the information system. The CORD (Collections, Objects, Roles and Domains) model is developed which is richer in appropriate modelling abstractions than current Object Models. A flexible Object Prototyping tool based on a Semantic Data Storage Manager has been developed which enables a variety of models to be stored and experimented with. A statistical summary table model COST (Collections of Objects Statistical Table) has been developed within CORD and is shown to be adequate to meet the modelling needs of Decision Support and Executive Information Systems. The COST model is supported by a statistical table creator and editor COSTed which is also built on top of the Object Prototyper and uses the CORD model to manage its metadata.

A composite framework for the strategic alignment of information systems development

Information systems are corporate resources, therefore information systems development must be aligned with corporate strategy. This thesis proposes that effective strategic alignment of information systems requires information systems development, information systems planning and strategic management to be united. Literature in these areas is examined, breaching the academic boundaries which separate these areas, to contribute a synthesised approach to the strategic alignment of information systems development. Previous work in information systems planning has extended information systems development techniques, such as data modelling, into strategic planning activities, neglecting techniques of strategic management. Examination of strategic management in this thesis, identifies parallel trends in strategic management and information systems development; the premises of the learning school of strategic management are similar to those of soft systems approaches to information systems development. It is therefore proposed that strategic management can be supported by a soft systems approach. Strategic management tools and techniques frame individual views of a strategic situation; soft systems approaches can integrate these diverse views to explore the internal and external environments of an organisation. The information derived from strategic analysis justifies the need for an information system and provides a starting point for information systems development. This is demonstrated by a composite framework which enables each information system to be justified according to its direct contribution to corporate strategy. The proposed framework was developed through action research conducted in a number of organisations of varying types. This suggests that the framework can be widely used to support the strategic alignment of information systems development, thereby contributing to organisational success.

A contingency framework for information systems development

This research concerns information systems and information systems development. The thesis describes an approach to information systems development called Multiview. This is a methodology which seeks to combine the strengths of a number of different, existing approaches in a coherent manner. Many of these approaches are radically different in terms of concepts, philosophy, assumptions, methods, techniques and tools. Three case studies are described presenting Multiview 'in action'. The first is used mainly to expose the strengths and weaknesses of an early version of the approach discussed in the thesis. Tools and techniques are described in the thesis which aim to strengthen the approach. Two further case studies are presented to illustrate the use of this second version of Multiview. This is not put forward as an 'ideal methodology' and the case studies expose some of the difficulties and practical problems of information systems work and the use of the methodology. A more contingency based approach to information systems development is advocated using Multiview as a framework rather than a prescriptive tool. Each information systems project and the use of the framework is unique, contingent on the particular problem situation. The skills of different analysts, the backgrounds of users and the situations in which they are constrained to work have always to be taken into account in any project. The realities of the situation will cause departure from the 'ideal methodology' in order to allow for the exigencies of the real world. Multiview can therefore be said to be an approach used to explore the application area in order to develop an information system.

The Application of Geographic Information Systems to climate change & land evaluation : a study of the effects of climate change upon crop productivity in a sub-tropical environment

This research investigates the contribution that Geographic Information Systems (GIS) can make to the land suitability process used to determine the effects of a climate change scenario. The research is intended to redress the severe under representation of Developing countries within the literature examining the impacts of climatic change upon crop productivity. The methodology adopts some of the Intergovernmental Panel on Climate Change (IPCC) estimates for regional climate variations, based upon General Circulation Model predictions (GCMs) and applies them to a baseline climate for Bangladesh. Utilising the United Nations Food & Agricultural Organisation's Agro-ecological Zones land suitability methodology and crop yield model, the effects of the scenario upon agricultural productivity on 14 crops are determined. A Geographic Information System (IDRISI) is adopted in order to facilitate the methodology, in conjunction with a specially designed spreadsheet, used to determine the yield and suitability rating for each crop. A simple optimisation routine using the GIS is incorporated to provide an indication of the 'maximum theoretical' yield available to the country, should the most calorifically significant crops be cultivated on each land unit both before and after the climate change scenario. This routine will provide an estimate of the theoretical population supporting capacity of the country, both now and in the future, to assist with planning strategies and research. The research evaluates the utility of this alternative GIS based methodology for the land evaluation process and determines the relative changes in crop yields that may result from changes in temperature, photosynthesis and flooding hazard frequency. In summary, the combination of a GIS and a spreadsheet was successful, the yield prediction model indicates that the application of the climate change scenario will have a deleterious effect upon the yields of the study crops. Any yield reductions will have severe implications for agricultural practices. The optimisation routine suggests that the 'theoretical maximum' population supporting capacity is well in excess of current and future population figures. If this agricultural potential could be realised however, it may provide some amelioration from the effects of climate change.

Budgeting, budgetary control and management information in the highways departments

The need for an adequate information system for the Highways Departments in the United Kingdom has been recognised by the report of a committee presented to the Minister of Transport in 1970, (The Marshall Report). This research aims to present a comprehensive information system on a sound theoretical basis which should enable the different levels of management to execute their work adequately. The suggested system presented in this research covers the different functions of the Highways Department, and presents a suggested solution for problems which may occur during the planning and controlling of work in the different locations of the Highways Department. The information system consists of:- 1. A coding system covering the cost units, cost centres and cost elements. 2. Cost accounting records for the cost units and cost centres. 3. A budgeting and budgetary control system covering, the different planning methods and procedures which are required for preparing the capital expenditure budget, the improvement and maintenance operation flexible budgets and programme of work, the plant budget, the administration budget, and the purchasing budget. 4. A reporting system which ensures that the different levels of management are receiving relevant and timely information. 5. The flow of documents which covers the relationship between the prime documents, the cost accounting records, budgets, reports and their relation to the different sections and offices within the department. A comprehensive cost units, cost centres, and cost elements codes together with a number of examples demonstrating the results of the survey, and examples of the application and procedures of the suggested information system have been illustrated separately as appendices. The emphasis is on the information required for internal control by management personnel within the County Council.

Combining ERP systems with enterprise 2.0

The paper discusses both the complementary factors and contradictions of adoption ERP based systems with enterprise 2.0. ERP is well known as its' efficient business process management. Also the high failure rate the system implementation is famous as well. According to [1], ERP systems could achieve efficient business performance by enabling a standardized business process design, but at a cost of flexibility in operations. However, enterprise 2.0 supports flexible business process management, informal and less structured interactions [3],[4],[21]. Traditional researcher claimed efficiency and flexibility may seem incompatible in that they are different business objectives and may exist in different organizational environments. However, the paper will break traditional norms that combine ERP and enterprise 2.0 in a single enterprise to improve both efficient and flexible operations simultaneously. Based on the multiple cases studies, four cases presented different attitudes on usage ERP systems and enterprise social systems. Based on socio-technical theory, the paper presents in-depth analysis benefits of combination ERP with enterprise 2.0 for these firms.

Η διαχείριση αλλαγών στην υγεία

Η διαχείριση αλλαγών είναι μια σημαντική πρόκληση για τις μονάδες υγείας και απαιτεί ικανότητες και ετοιμότητα από τη διοίκησή τους. Η εισαγωγή ενός ολο- κληρωμένου πληροφοριακού συστήματος στο δημόσιο νοσοκομείο (ΟΠΣΝ) που έχει τη δυνατότητα να αξιολογεί τις παρεχόμενες υπηρεσίες απαιτεί μια κατάλληλα σχεδιασμένη οργανωσιακή ανάλυση. Αυτή γίνεται, αξιοποιώντας το διαγνωστικό μοντέλο συνταύτισης των Nadler και Tushman όπου αντιμετωπίζει τον οργανισμό και τις αλλαγές ως ένα δυναμικό και αλληλοεξαρτώμενο σύστημα. Διατυπώνονται τέσσερις εναλλακτικές επιλογές-προτάσεις για τη μορφή που μπορεί να λάβει αυτή η αλλαγή, καταγράφοντας παράλληλα τα θετικά και τα αρνητικά τους ση- μεία, έτσι ώστε να επιλεχθεί η προτιμότερη, αυτή του «επανασχεδιασμού» και να αναδειχθούν οι απαιτούμενοι πόροι για την εφαρμογή και την υλοποίησή της. Η ορθή διαχείριση αλλαγής απαιτεί να καθοριστούν οι αντίστοιχοι στόχοι, να ανα- δειχθούν οι ευκαιρίες από την ανάπτυξη του ΟΠΣΝ στο δημόσιο νοσοκομείο και να καταγραφούν τα στάδια εφαρμογής του. Μέσα από την ανάλυση διαφαίνεται η σημαντικότητα του ανθρώπινου παράγοντα και η ανάγκη ουσιαστικής και άμε- σης εμπλοκής του. Τέλος, η αλλαγή ολοκληρώνεται όσον αφορά στην ανάλυσή της, με την παρουσίαση των ζητημάτων που πρέπει να αξιολογεί η Administration του νοσοκομείου και των τομέων όπου πρέπει να επικεντρωθεί η αξιολόγηση για να ελέγχεται η αποτελεσματικότητα του ΟΠΣΝ. The management of change is a significant challenge for health units, which demands skills and readiness on the part of their administration. The introduction of an integrated information system in a public hospital to provide the ability to assess the services offered necessitates the conduct of a well designed organizational analysis. This can be made using the diagnostic congruence model of Nadler and Tushman, which treats the organization and the changes as a dynamic and interdependent system. Four alternative choices with respect to change are presented here, pointing out their relative merits and drawbacks. The preferred alternative is that of "reformation" and the resources necessary for its implementation are delineated. The effective management of change requires determination of the appropriate goals, definition of the opportunities arising from the development of this system and recording of the stages of implementation. Through this analysis, the importance of the human factor is apparent, and the need for its immediate involvement is imperative. Finally, this analysis of organizational change concludes with presen- tation of the issues that the hospital administration needs to assess and the specific areas of focus to be defined in order for the effectiveness of the integrated information system to be monitored.

Building the hybrid organisation through ERP and enterprise social software

This research traces the implementation of an information system in the form of ERP modules covering tenant and contract management in a Chinese service company. Misalignments between the ERP system specification and user needs led to the adoption of informal processes within the organisation. These processes are facilitated within an informal organisational structure and are based on human interactions undertaken within the formal organisation. Rather than to attempt to suppress the emergence of the informal organisation the company decided to channel the energies of staff involved in informal processes towards organisational goals. The company achieved this by harnessing the capabilities of what we term a hybrid ERP system, combining the functionality of a traditional (formal) ERP installation with the capabilities of Enterprise Social Software (ESS). However the company recognised that the successful operation of the hybrid ERP system would require a number of changes in organisational design in areas such as reporting structures and communication channels. A narrative provided by interviews with company personnel is thematised around the formal and informal characteristics of the organisation as defined in the literature. This leads to a definition of the characteristics of the hybrid organisation and strategies for enabling a hybrid organisation, facilitated by a hybrid ERP system, which directs formal and informal behaviour towards organisational goals and provides a template for future hybrid implementations.