AHP-Driven Knowledge Leakage Risk Assessment Model: A Construct-Apply-Control Cycle Approach

AHP-Driven Knowledge Leakage Risk Assessment Model: A Construct-Apply-Control Cycle Approach

Haley Wing Chi Tsang (Knowledge Management and Innovation Research Centre, The Hong Kong Polytechnic University, Hong Kong), Wing Bun Lee (Knowledge Management and Innovation Research Centre, The Hong Kong Polytechnic University, Hong Kong) and Eric Tsui (Knowledge Management and Innovation Research Centre, The Hong Kong Polytechnic University, Hong Kong)
Copyright: © 2016 |Pages: 18
DOI: 10.4018/IJKSS.2016070101
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Abstract

Intellectual Capital (IC) is becoming more widely understood by the academic and business communities, especially its important role in value creation of an organization. However, few people are aware that IC, if not managed properly, may also pose threats, sometime serious, to an organization. Knowledge leakage from an organization, for example, may come about when an experienced employee leaves for another job. Knowledge leakage is pervasive throughout an organization but is seldom noticed until the consequence is felt. This intellectual capital risk has to be systematically and effectively identified, assessed and controlled in the whole value chain of an organization. An AHP (Analytic Hierarchy Process) based multi-dimensional decision making and assessment model is developed to determine knowledge leakage risk in an organization.
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Risk Assessment And Analytical Hierarchy Process

In enterprise risk management, there are a number of frameworks in use today and COSO (Committee of Sponsoring Organizations of the Treadway Commission) (Curtis & Carey, 2012) is the most widely adopted by organizations. Typically, risk management involves identifying, prioritizing, responding to, assessing, monitoring and reporting risks. The risks may include physical risks like fire and earthquake and financial risks like interest rate instability and payment default. However, there is also an important category of risks not specifically addressed by these common frameworks but related to IC of organizations which must be effectively managed to ensure competitiveness and sustainability. These risks, arising from IC not properly managed, are called IC risks. Examples are: knowledge leakage, intellectual property (IP) loss and employee turnover. In this paper, the focus is on risk assessment component of a framework as applied to one of the most important IC risks - knowledge leakage. As for risk assessment, it refers to activities carried out in establishing assessment criteria and scope, determining likelihood and impact of risks, and prioritizing them (Hallikas, Karvonen, Pulkkinen, Virolainen, &Tuominen, 2004). Common frameworks like COSO (Curtis & Carey, 2012) and CAS (Casualty Actuarial Society) (Casualty Actuarial Society, 2013) have similar risk assessment methodology. The determination of the level of risk is important in risk management, including IC risk management. According to Zhi (1995) and Williams (1993), risk is expressed mathematically as:

where R is the level of risk, P is the probability for the risk to occur and I is the impact of the risk.

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