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FACULTY OF APPLIED SOCIAL SCIENCES (FASS)

MAY / 2017

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REPUTATION RISK MANAGEMENT

NO. MATRIKULASI : 820520145523001

NO. KAD PENGNEALAN : 820520-14-5523
NO. TELEFON : 019 272 6724
E-MEL : selipejepon@gmail.edu.my
PUSAT PEMBELAJARAN : PETALING JAYA
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1. INTRODUCTION.

Communication is a very important area for all other areas, so that human deeds and
behaviors will not be perfect without any communication. In the early stages of human
existence, communication is only for the sake of singles.
Corporate Communication can be defined as a process or act of translating or altering
corporate physical identities such as logos, colors, words and so on that symbolize the
organization to a mental image of a corporation or thought. Means when viewing a
combination of colors or logos, without being told, the observer will automatically think of
the organization. For example through corporate communications, a company will do a
'promotional mix' process.

INTEGRATED FRAMEWORK OF CORPORATE

COMMUNICATION

CORPORATE COMMUNICATION

PUBLIC ISSUES INVESTOR MEDIA DIRECT

ADVERTISING
AFFAIRS MANAGEMENT RELATIONS RELATIONS MARKETING

INTERNAL
SALES
COMMUNICATI
COMMUNITY PUBLICITY/ Fig 1 :
PROMOTIONS RELATIONS SPONSORSHIP
ON

Integrated framework of corporate communication

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2. THE IMPORTANCE OF CORPORATE COMMUNICATION WITHIN THE

ORGANIZATION.

Communication as an exchange of ideas, opinions, information, relationships and so on

that has a purpose and is presented personally or indirectly through symbols or signals aimed
at achieving organizational goals.
The breakdown of dimensions or known as multidimensional approaches is applied as it
provides a comprehensive overview of the communication phenomenon found within the
organization, as well as helping the organization to identify in more detail the strengths and
weaknesses of each aspect of communication within the organization. This is because each
dimension has its own significance in contributing to the overall communication satisfaction
that exists within an organization. Downs and Hazen (1977) break down the dimensions of
organizational communication to top communications, subordinate communication, corporate
perspective, information / media quality, organizational integrity, horizontal communication,
communication climate, personal feedback, interaction and supervision communication.

According to Goldhaber (1982) if a member of the organization does not have the
information they need they will become more volatile and may produce lesser quality. In
addition, uncertainties can also occur when an organization's employees receive too much or
little information that meets their needs and requirements.
Blur communication will create confusion and misunderstanding that can affect the
organization's integrity. One of the issues in the context of organizational management in
Malaysia is engagement in an organization such as involvement in decision-making that is
particularly low especially for civil servants.

In addition, if workers lack information in the communication process, they certainly do

not have a way to make progress planning within the organization. They may not clearly see
promotion opportunities and therefore continue to decide that their ability to advance within
the organization is limited. The flow of this problem is appropriate for the management of an
organization, especially the supervisor is willing to share information with members of the
organization how the organization is administered, what is its objective and how to achieve
the objectives that have been jointly developed.
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Gildea (1980) states that employees of an organization need information such as

organizational direction, personnel policy planning, task-related data, career advancement
information, and organizational competition position with its competitors. Hence, the
workforce requires several communication processes involving face-to-face communication,
group discussions with supervisors, with top management and co-workers. It is also said that
by meeting the needs of information such as the needs of the staff will have an impact on job
satisfaction. David (1997) recognizes the importance of communication in the process of
planning strategic management of an organization. Involvement of members at all levels of
the organization in the strategic planning process will be able to enhance the high
performance of the work.

The above descriptions show the importance, roles and obstacles to each
organizational communication dimension in the context of organizational management.
Studies on the effectiveness of satisfaction on organizational communication are emphasized
by scholars and organizational communication practitioners because of their ability to impact
on organizational staff (Arnold & Feldman, 1986; Burin, 1992). In addition, effective
organizational communication is able to meet staff expectations of the desired form of
communication and thereby increase the level of satisfaction of the staff (Morley &
Schockley-Zalabak, 1997). Hence, the issue of organizational communication which is the
essence of this discussion is also a universal phenomenon faced by organizational staff in
Malaysia and is one of the issues that should be addressed to improve the performance of the
organization.
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3. PERBADANAN PUTAJAYA RISK MANAGEMENT.

The risk management process will succeed if it is based on earnings comprehensive

risk profile for the organization. In the Perbadanan Putrajaya, this process will begin at the
departmental level where the risk profile is identified by units or divisions will be filtered by
their respective departments and create their own risk list. Then, at that level higher
organization, known "HIGH" and "CATASTROPHIC" risks definitely in the ranks of the job
will be screened and if received will be inserted into in the integrated risk register of
Perbadanan Putrajaya.

Fig 2 :

Perbadanan Putrajaya risk management meeting

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3.1 RISK IDENTIFICATION.

Risk identification is a process of catering and categorizing internal and external

powers that may affect the Perbadanan Putrajaya. It is is a continuous process because of the
risks and the environment is subject to changes and uncertainties. There are various methods
to assist in the identification process such as brainstorming sessions, controlled self-
assessment, and interviews.

3.1.1 ESTABLISH RISK MANAGEMENT CONTEXT.

Risk identification activities are performed by conducting some analysis

among others:

• Analysis of Perbadanan Putrajaya vision, mission and objectives.

• Analysis of strategies to achieve objectives.
• Analysis of financial statements.
• Analysis of operational flow charts, which may provide a warning about aspects
The operations of the incredible Perbadanan Putrajaya that will pose a risk
Special.
• Analysis of organizational chart relationships and reporting systems within the organization.
• Analysis of strengths, weaknesses, opportunities, and threats (SWOT).
• Scanning analysis of changes in the external environment (PEST).
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3.1.2 TYPES OF RISK.

Existing risks
Existing risks are the risks associated with the nature of nature operations in the
corporation beyond the control of the Management.
Controllable risk
Controllable risk is a risk where important errors can be occur and may be inevitable,
detected or corrected precisely on time by the internal control system, but the management
may directly affect the risk.

3.1.3 RISK CATEGORY.

In the Perbadanan Putrajaya Risk Management Framework, risks are classified

According to the seven (7) main categories as follows:

RISK CATEGORY DESCRIPTION

EXTERNAL RISK Risks arising from external power

May affect the operations of the Perbadanan Putrajaya.
For example, major disasters, political influences,
Changes in laws and regulations etc.

STRATEGIC RISK Risks arising from the lack of

Planning, vision and implementation of management
Performance.
For example, there is no strategic plan for
Organization, there is no performance measurement system etc.

FINANCIAL RISK Cash flow risk is not effectively managed

To maximize cash availability, rates
Interest and credit risk.
For example, financing is off balance sheet,
Weak asset management, budget control the weak and so on.
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SERVICE RISK Risks arising from weak services in terms of quality, needs and development.
For example, services that do not meet
Customer needs and so on.

HUMAN RISK Risks posed by employees may result in inefficiency or fraud.

For example, an unclear assignment command, source
Inadequate / overdue man, action
Which are illegal, skillful and
Insufficient training and so on.

INTERNAL Risk of ineffective operation and not effective in implementing the operating model
PROCESS RISK
Perbadanan Putrajaya.
For example, inadequate policies and procedures,
Bureaucracy and so on.

INFORMATION Risks arising from weaknesses in control and the security of information systems
SYSTEM RISK
that become spine to Perbadanan Putrajaya.
For example, inaccurate information, deployment
Unauthorized information, hardware and software
Which is outdated, leakage of the official secret of the organization etc.
etc.
Fig 3: Perbadanan Putrajaya risk management risk categories
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3.1.4 RISK ANALYSIS AND ASSESSMENT.

Assessing Risk
The risk assessment foundation in Perbadanan Putrajaya is based on scale possible
and scale effects contained in the AS/NZ 4360 standard such as a table (Fig 4).

LIKELIHOOD SCALE

POSSIBILITY EXPLAINATION

COMMON The risk is expected to occur in most circumstances.

LIKELY The risk will probably occur in most circumstances.

POSSIBLE The risk will probably occur in most circumstances.

UNLIKELY The risk could occur at some time.

RARE The risk may only occur in exceptional circumstances.

Fig 4: Scale possible and scale effects contained in the AS/ NZ 4360 standard
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Fig 5 : The
type of risk that
the
Perbadanan
Putrajaya
faces.

LIKELIHOOD EXPLAINATION

Loss of ability to sustain ongoing operations. A situation that

CATASTROPHIC would cause a standalone business to cease operations.
(Death, toxic release off-site with detrimental effect, huge
financial loss).

Significant impact on the achievement of strategic objectives

and targets relating to corporate plan. (Extensive injuries, loss
MAJOR of production capability, off-site release with no detrimental
effects, high financial loss).
Disruption of normal operations with a limited effect on the
achievement of strategic objectives or targets relating to
MODERATE corporate plan. (Medical treatment required, on-site release
contained with outside assistance, substantial financial loss).

No material impact on the achievement of business objectives

MINOR or strategy. (First aid treatment, on-site release immediately
contained, medium financial loss).

INSIGNIFICANT Negligible impact. (No injuries, low financial loss)

Fig 6: Scale possible and scale effects contained in the US / NZ 4360 standard
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3.1.5 RISK ASSESSMENT OF PERBADANAN PUTRAJAYA.

Based on the probability scale and scale of the AS/NZ 4360 impact, Perbadanan
Putrajaya has provided a scale such as a table below has been modified according to
organizational requirements and tolerance levels of the Perbadanan Putrajaya. However
before any risk is assessed to apply the scale of the Perbadanan Putrajaya as below, the risks
involved are first analysed adopt possible scales and effects provided at the level department.

CONSEQUENCE SCALE

SCALE 1 2 3 4 5

DESCRIPTOR IGSIGNIFICAN MINOR MODERATE MAJOR CATASTROPHIC

T
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Moderate Significant Major but Catastrophic

Environmental Minor environmental impact on/ reversible and irreversible
Hazard environmental impact on off work site environmental environmental
damage. more requiring damages. damages. Full
Contained than just work longer Full clean up clean up not
within work site. Quick period of clean / recovery possible
site. Quick clean clean up/recovery extremely
up /recovery up/recovery possible difficult and
possible possible expensive

Program / Program / Program / Program / Program /

Project cost Project cost Project cost Project cost Project cost
within budget within budget overrun <30% overrun >30% overrun >40%
Financial with variations with variations of budget of budget of budget
<10% of budget <20% of
budget

Fig 7: Consequence Scale

CONSEQUENCE SCALE

SCALE 1 2 3 4 5
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DESCRIPTOR IGSIGNIFICAN MINOR MODERATE MAJOR CATASTROPHIC

T

Project Project failure Project failure Project failure Project failure Project failure
Management with project with project with project with project with project
value <10 value >10 value >20 value >50 value >100
million million million million million

Facility Damages to Damages to Damages to Damages to Damages to

and Asset asset <10% of asset <20% of asset <30% of asset >30% of asset >40% of
Management replacement replacement replacement replacement replacement
value value value value value

Major breach Serious breach

of statutory of statutory
Minor legal Significant duty duty including
issues/non breach of including a multiple class
Legal Nil compliance/ statutory duty few action with high
breach of with possible class action compensation
regulation class action with major implications
compensation that beyond
implications payment
capability

Fig 8: Consequence Scale

CONSEQUENCE SCALE

SCALE 1 2 3 4 5
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DESCRIPTOR IGSIGNIFICAN MINOR MODERATE MAJOR CATASTROPHIC

T

> 4 days
Occupational First aid injuries Outpatient absence or Permanent
Safety and injuries 1 – 4 days temporary disability and
Health absence (MC) disability. fatalities
Dangerous
occurrence
/ poisoning /
diseases that
requires
report
to Department
Of
Occupational
Safety And
Health
(DOSH)

Disease spread
under control Epidemic / state
Environmental Nil Disease spread (with assistance Endemic of emergency /
Health under control from other fatalities
agencies)

Fig 9: Consequence Scale

3.1.6 RISK PRIORITIES.

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Accordingly, all risks that have been analyzed will go through another the process of
which is the overall risk assessment process based on the Rating Matrix Risk of Perbadanan
Putrajaya for the purpose of setting the priority of a risk through grading.

EFFECT

SCALE
IGSIGNIFICANT MINOR MODERATE MAJOR CATASTROPHIC

1 2 3 4 5
POSSIBLE

ALMOST 5 5 10 15 20 25
CERTAIN

LIKELY 4 4 8 12 16 20

9 12 15
POSSIBLE 3 3 6

6 8 10
UNLIKELY 2 2 4

3 4 5
RARE 1 1 2

Fig 10: Risk rating Matrix AS/NZS 4360:2004.

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4. RISK CONTROL.
After identifying and giving priority to risk, rank the next is to determine the response
or the way to manage risk, which includes the following rules:

4.1 ACCEPT THE RISK.

Accept risk and be prepared to manage the consequences or effects. Often, acceptable
risks are only risks that will result the impact or the loss is relatively small, however, if such
risks it should be monitored cumulatively.

4.2 AVOID RISK.

Avoiding risk by making decisions will not continue the activity or a policy that may
pose a risk or look for other ways to achieve objectives.

4.3 MOVE RISK.

Reduce risk by transferring it to third parties. This is involving other parties who will
bear or share risk, as for example, through an external source or insurance contract. However,
this is the opposite will create new risks, the risky organization may not be able to manage
such risks effectively.

4.4 REDUCE RISK.

Reduce risk by applying a control or action plan management. It may not be able to
eliminate the risks by default overall and some other risks may still be there but slow down
control or action can reduce either the likelihood of occurrence the risks or effects of such
risks (or possibly both).

a. Reducing possibilities reducing the likelihood of risk may not be eliminating all risks or
avoiding all losses, however reducing the frequency of losses.
b. Reduce effects reducing the impact of risk, reducing the severity of losses
which is incurred by carrying out business losses and losses take steps to reduce losses.
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4. MANAGEMENT PLAN

When the risk management method has been identified, the action plan is necessary
Provided for managing and dealing with such risks. This plan shall contains the following:

a. Identified risks;
b. Proposed risk mitigation actions or contingency plans including Plans Incident

Response (IRP), Emergency Response Plan (ERP) and Plan Disaster Response
(DRP).
c. List of analyzes used for example Cost and Benefit Analysis, SWOT analysis,
Competitive Analysis, Porter's 5 Forces, and Risk Tree Analysis.
d. Cross references to standard operating plans standard manual procedures work (MPK)
and desk files.
e. List of departments, divisions, units, and responsible officers in each level of

mitigation action or contingency plan.

f.
It is expected that with increasing experience and knowledge increasing the process of
effective risk management, the management (In particular the head of department) and risk
owners will be able to identify and assessing risks at their functional or operational stages.
This will help in an effort to identify risks naturally, expect them and handle it as early as
possible any project or task to be implemented and used as a container in assessing the power
level
advanced.
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5. THE IMPORTANCE OF STRATEGIC AND PRACTICAL LINK BETWEEN

REPUTATION AND RISK.

Strategy formulation is the main part of the strategic planning process. A robust
Enterprise Risk Management - ERM framework must provide relevant risk information for
decision takers so as to reduce the possibility of selecting a mistaken strategy or the absence
of an important one. Most common strategic planning tools do not even take risk into
account, which worsens the situation.

Risk area now assumes a more strategic role in organizations. It is increasingly being
recognized as a guidance provider on the path ahead, mitigating critical risks and allowing
companies to grow sustainably in the long-term.

To reinforce the importance of risk management, a study by (Deloitte 2012) regarding

the largest global public companies, from 2003 to 2012, points out that 73% of the root
causes for dramatic losses were derived from strategic risks, followed by financial (17%) and
operational (10%) risks. Besides that, empirical evaluations showed that firms that have
implemented ERM enjoy, an average, 16.5% premium in market valuation (Hoyt and
Liebenberg 2011) (Lam and Quinn 2014).

According to a study presented by (Deloitte 2013), strategic risks are risks that affect
or are created by an organization’s business strategy and strategic objectives. Financial risks
include areas such as financial reporting, valuation, market, liquidity, and credit risks.
Operational risks are major risks that affect an organization’s ability to execute its strategic
plan.

Regarding strategic risk management, Mark Frigo and Richard Anderson define
it as:

“a process for identifying, assessing and managing risks and uncertainties, affected
by internal and external events or scenarios, that could inhibit an organization’s
ability to achieve its strategy and strategic objectives with the ultimate goal of
creating and protecting shareholder and stakeholder value (Frigo and Anderson
2011”.
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5.1 STRATEGIC RISK ASSESMENT.

The set of strengths, weaknesses, threats and opportunities to the business of the
institution, already mapped, are indeed internal and external factors that bring uncertainty to
whether and when the institution may reach or exceed its goals. The effect of these
uncertainties on the strategic objectives is called strategic risk. Thus, this information can be
used to perform an initial mapping of strategic risks. To facilitate the risk identification
process and the results analysis, risks can be categorized by strategic topics, such as
economic, budget and others. The categorization adopted by the organization may vary
according to its business nature. In order to validate risks initially identified and map out new
strategic risks, it is of the utmost importance to organize meetings with board members
and/or senior executives, staff directly responsible for conducting the strategy of the
institution. It is recommended that these meetings should be based on the defined strategic
objectives, i.e., each meeting should focus on only one strategic objective. The technique, to
be used in the process of collecting new risks, can be, for example, scenario analysis for each
strategic topic.
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6 CONCLUSION.

Based on the discussion above, the analysis results support the hypothesis which was
formed in relation to the relationship between the organization's communication and the
organizational commitment. This finding shows that it exists significant and positive
relationship between satisfaction with organizational communication and organizational
commitment. The importance of effective organizational communication is evident based on
the results of the study. Increased in satisfaction towards organizational communication will
increase satisfaction work and organizational commitment. It shows in context organizations
that may differ in management, environment and so on, the role of effective organizational
communication and create satisfaction among employees of the organization is important.
The importance of effective communication is aligned with the views of scholars such as
Bednar (1983); Goldhaber (1990); Anderson (1995); Daniels, Spiker and Papa (1997) and
Weiss
(1998).
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