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Risk and Total Quality Management


Risk management is the strategic process of ranking the risks that are expected to occur within investment and then devising ways of tackling them in the best manner. As such, the process will be of substantial assistance towards the success of the particular venture. According to Davis and Jarvis (2007), the chance that an injury, harm, or loss will occur is referred to as a risk. Risk management is an extremely helpful strategy that will allow the success of the venture and increase its profitability. With proper risk management, investments can be profitable since the areas with the highest returns are usually high-risk areas. In addition, proper risk management will allow the business targets and objectives to be met. Consequently, risk management involves the process of setting up risk management systems per the identified risks.

The Processes of Risk Management

Therefore, the strategy calls for certain processes that must be followed to bear fruits (Davis & Jarvis 2007). These processes ensure that the implementation of risk management is fruitful and ends up being beneficial to an organization.

Risk Management Process

  • The process of identifying all the risks within an investment. This involves trying to find out the possible risks facing the identified investment.
  • Determining the probability of a risk happening. This process involves activities of determining the chance that a risk will occur. This involves studying the environment of operation and all factors surrounding it.
  • Knowing how to handle the risks if they occur. This process involves looking around for the available options of dealing with the possible risks.
  • Setting up methods of handling the consequences. This process involves developing systems of dealing and putting into control the possible risks.
  • Putting in close check how the risk management methods are fairing. The process of evaluating and checking the performance of the risk management systems comes occurs here (Golub & Tilman 2000). This process determines whether the risk management method is effective or not.

Mizrahi Tefahot Bank in Israel

The processes of Risk Management can be explained using the case of Mizrahi Tefahot a Bank in Israel. The bank was searching for an effective risk management system and settled for Algorithmics. The organization adopted this solution to attain the highest levels of risk management. Algorithmics provide the required technical support and key requirements for Risk Management (Croutly, Galai & Mark 2001). In addition, it assists in the control of capital and helps in regulating all risks occurring within the organization. As such, the organization devised methods of handling risks with the assistance of the Algorithmic solution.

As banks were required to adhere to the requirements of Basell II, Mizrahi took it as an opportunity to improve its level of risk management through the establishment of an effective system. As a result, the bank went established a policy of creating effective risk management tools; hence, it established different sections of risk management (Golub & Tilman 2000). As a result, Mizrahi Tefahot announced to the whole organization that proper management, as well as strong credit management values, were the key tools for a successful system (Davis & Jarvis 2007). This occurred through employee training on risk assessment and control.

Benefits of Effective Risk Management

With proper risk management, several benefits will be enjoyed within the organization in consideration. As such, some of the advantages of establishing an effective system include proper utilization and allocation of resources. On identifying the possible risks, the number of resources to be employed on a certain investment area are easy to determine. The ease is created by the fact that the risks involved and the returns expected from the investment are well known. Similarly, effective risk management simplifies planning and making decisions within the organization. As such, the practice enables individuals to get the big picture of the investment, which improves the planning process (Golub & Tilman 2000).

Consequently, effective planning ensures that the investment objectives are attained as planned. The third benefit of risk management is that it enables one to be aware of a certain bad event and therefore prepare in advance. In advance, the preparation will put one in a position where he or she will use less energy and resources in tackling the situation unlike is the case when not prepared. Preparation due to proper risk management will end up cutting costs and reducing stress. More so, risk management helps in budgeting as an organization will get the estimate for appropriate future operations; hence, allow for effective financial management.

Implementation of Total Quality Management

Various management approaches are applied during the implementation of total quality management. Quality in this context refers to the extent to which a customer feels comfortable about a product or service (Ashley & Rawlins 2008). Total quality management also focuses on aspects such as ensuring the satisfaction is continuous, improving all the time, and always being creative; however, the perception of quality may vary from one customer to another.

Procedures for Implementing Total Quality Management

The implementation process is usually conducted to ensure customer satisfaction through the provision of quality products or services, processes within the organization, as well as allocation and use of the organization’s resources. In addition, the implementation is supposed to be done in a way that will have a long-term impact on the objectives of an organization (Pike & Barnes 1996). Individuals must understand that the process of implementation is not simple and requires sufficient time.

According to relevant sources, there has not been any universally accepted system for the approach. This has made different organizations use various methods of implementation. The common thing is that all the different methods are usually aimed at attaining customer satisfaction through the aspect of quality creation and improvement (Pike & Barnes 1996). The management of each organization sets up a method that fits it properly and sets its standards which will enable it to achieve its set objectives.

Establishment of the Objectives

The procedures of implementing the strategy begin with the initial establishment of the objectives (Weaver 1991). The top management and the workforce within an organization should take up the need and work towards its successful implementation. In the first place, the management should commit itself to set up the system in line with the established goals and allow its successful implementation (Weaver 1991).

On the other hand, all the other employees should take up what the management has formulated and consider it during the implementation process. Under this procedure, the management should ensure that workers are introduced and appreciate the value of total quality management within the organization. This will ensure that the employees understand the need for the system and also learn how to make it successful. With this step taken, employees will feel like part of the organization and commit themselves towards achieving the same objective. Such actions ensure that quality is imparted to all levels of organizations.

Establishment of the Levels of Implementation

The other procedure for implementation is creating and setting the appropriate levels of implementation. The management should come up with stages that ensure the implementation process is conducted successfully. As such, these stages will ensure that all the details are put into consideration to allow for effective management. Once the stages of implementation are created, the other procedure is to put a sense of responsibility into the minds of all employees in the company (Weaver 1991). This will ensure that everybody works towards quality creation and advancement. There have to be defined scopes of work of each employee. Upgrading the plans in place is the follow-up procedure that comes during the implementation process. There have to be pre-plans and their review usually helpfully comes as a very helpful thing in the process of implementation.

Implementation requires that committees or groups for ensuring that there is continuous improvement take place are created. These teams make sure that the aspects of quality control as per an organization’s system are kept on track and new ones are continuously formulated. With this, you will find that the objectives of an organization are achieved as per the Total Quality implementation system formulated by the management. Training is a procedure that ensures that the ultimate goals and objectives of an organization which in this context focus on customer satisfaction are achieved. Training will ensure that the employees are kept on their toes on the already given information, while new skills are handed out for improvements purposes.

Setting the Standard of Quality

The process of total quality management implementation is usually supported by certain principles which are very important (Johnson & Kezense 1993). One of the principles is that quality must be taken care of. Everybody should understand that higher quality standards are achievable and once this happens then proper care should be taken in maintaining as well as improving it. This is supported by the principle that everyone in the organization should put in mind that upholding quality is for all. It is not the top management to work towards quality improvement but all up to the people at the lowest levels of the organization. Everyone in the organization should improve his performance quality and, in the end, the quality of the entire organization improves.

Ensuring Customer Satisfaction

This approach puts customer satisfaction as a priority while minimizing the level of wastage. This is usually achieved by the organization making sure that all the parts and levels of an organization are functioning to their maximum. This is through quality improvement and proper policy formulation. Total quality management works towards making sure that all the departments in an organization are integrated and working hand in hand. This management approach tries to make sure that an entire organization’s goal is to improve the quality of their businesses’ goods and services. This is made possible by trying to achieve the highest possible levels of quality.

After setting up a total quality management system then an organization move on into the implementation stage (Ashley & Rawlins 2008).

In connection, each individual within an organization should work with the knowledge that the customer comes first in mind. This will end up improving the organization’s products and services. In addition, the implementation of TQM is supported by the principle that individuals are usually not the main hindrance to achieving objectives, but the channels set up within the systems (Pike & Barnes 1996). The management together with an organization’s workforce should ensure that the systems set up are supported and regularly improved. This will ensure that the objectives which are aimed at are achieved without fail.

Taking Precautionary Measures against Risks

In connection, total quality management will be achieved by taking excellent precautionary measures than responding to problems. This ensures that problems are avoided through aspects such as proper planning and oversight. This principle will ensure that costs are cut down, time is saved and also objective achievement is not derailed.

Barriers to the Implementation of Total Quality Management

According to Haberer and Webb (1994), the procedure of implementing TQM within an organization faces several barriers and challenges. The barriers can be described as the factors that compromise or impede the implementation process. One of the barriers to implementation.

Inadequate Levels of Human Capital

One of the barriers is the lack of sufficient human capital education and training. When an organization wants to implement a Total Quality Management system there is a need for proper employee briefing and upgrading and if this does not happen then the process is hindered.

Inadequate Planning

Inadequate planning is another barrier to the implementation process. For an organization to attain quality, then it is necessary to plan for it. When no planning is done quality will not be attained hence customer satisfaction which is always the main objective of an organization is not achieved.

Ineffective Leadership

In connection, ineffective leadership towards quality development and improvement is a barrier to the successful implementation of TQM. Leadership can be defined as the ability of an individual to make others do or perform in a certain way (Haberer & Webb 1994). The kind of influence that the leader has on others is very important in determining the direction that the organization takes towards achieving its objectives (Eglinton 1982).

Leadership that does not focus on quality leads to failure in the implementation process. Therefore an organization is required to look for leaders who commit to quality. Since leadership is guided by the relationships between people, a leader can use this aspect to grow teamwork; hence, the entire organization can work towards achieving the appropriate level of quality management (Eglinton 1982). With leaders whose attitudes towards quality are not aggressive or are negative, the implementation process is meant to fail.

Inadequate Resources

The process of establishing quality management requires certain resources for it to succeed. When the resources are not available the process is hindered and therefore this is one of the major barriers. As indicated earlier, the Total Quality Management process requires expensive training, and also sometimes the process requires the company to seek the services of experts which come at a price (Sashkin & Kiser 1993).

Inadequate adherence to Customer Requirements

Inadequate attention to customer requirements is another factor that forms a barrier to achieving an effective TQM process. When the main aspects that recognize the customers’ needs are not taken care of, then the implementation process is hindered. Short-term decisions and plans are a barrier to the achievement of successful total quality management processes (Sashkin & Kiser 1993). As indicated earlier the process of implementation is not something done in one day but requires time. Organizations make a big mistake in making plans and decisions which to dot cover future events during which the implementation process will still be on. This means that the process will be left unsupported for some time hence its failure.

The issue of individuals in our case organizations’ top management and employees failing to recognize problems facing them as chances to maximize on them and rise to action ends up being a barrier to implementation of the Total Quality Management systems (Sashkin & Kiser 1993). Individuals fail to seize the opportunities which present themselves through challenges. The top management should assist the other employees in cracking problems and coming up with solutions. This assists in working towards quality creation and at long last create customer satisfaction. However, if evading problems occur the process of implementation is hindered.

Inadequate Motivation

Motivation among individuals at various levels within an organization will ensure that employees keep working; hence, leading to effective implementation of the management system. As such, where individuals do not receive adequate motivation, then the process of implementing quality management becomes unsuccessful. People without motivation end up relaxing and therefore their working towards higher quality or objective achievement is derailed. In connection, another barrier to implementation of Total Quality Management occurs when there is a lack of solidarity, as well as respect for leaders within a company (Morfaw 2009). This factor will end up causing disunity in the levels of an organization and therefore working towards the same goal becomes difficult. This ends up interfering with the route towards customer satisfaction since quality cannot be created.

Change Factors

According to relevant sources, people are known to be resistant to change. If the workers within an organization are not ready to take new changes being introduced in an organization, then this becomes a barrier to the process of Total Quality Management (Ashley & Rawlins 2008). This barrier becomes worse if the employees do not show any interest in the process. According to Morfaw (2009) failure in understanding the idea of TQM hinders the process of implementation. In several cases, employees will lose their morale when they do not seem to get the best in what they do. The change barrier worsens when the individuals do not have an excellent background in TQM.


As established within the paper, businesses are subject to various risks that force investors, as well as business owners to put more effort and resources into the management of risks. Risk management should therefore be enlisted as one of the major management concerns within organizations. As such, individuals must understand when to involve themselves in risky events, which would raise their risk management skills and experience. In connection, organizations should be extremely careful and creative while executing the TQM process to achieve beneficial results. The people responsible for the implementation process should ensure that the possible barriers are taken care of to avoid any impeding factors. In conclusion, the achievement of a successful organization will depend on its ability to create an effective TQM service.


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