Implementing Enterprise Risk Management, 2nd Edition

Overcome ERM implementation challenges by taking cues from leading global organizations

Implementing Enterprise Risk Management is a practical guide to establishing an effective ERM system by applying best practices at a granular level. Case studies of leading organizations including Mars, Statoil, LEGO, British Columbia Lottery Corporation, and Astro illustrate the real-world implementation of ERM on a macro level, while also addressing how ERM informs the response to specific incidents. Readers will learn how top companies are effectively constructing ERM systems to positively drive financial growth and manage operational and outside risk factors. By addressing the challenges of adopting ERM in large organizations with different functioning silos and well-established processes, this guide provides expert insight into fitting the new framework into cultures resistant to change.

Enterprise risk management covers accidental losses as well as financial, strategic, operational, and other risks. Recent economic and financial market volatility has fueled a heightened interest in ERM, and regulators and investors have begun to scrutinize companies’ risk-management policies and procedures. Implementing Enterprise Risk Management provides clear, demonstrative instruction on establishing a strong, effective system. Readers will learn to:

• Put the right people in the right places to build a strong ERM framework
• Establish an ERM system in the face of cultural, logistical, and historical challenges
• Create a common language and reporting system for communicating key risk indicators
• Create a risk-aware culture without discouraging beneficial risk-taking behaviors

ERM is a complex endeavor, requiring expert planning, organization, and leadership, with the goal of steering a company’s activities in a direction that minimizes the effects of risk on financial value and performance. Corporate boards are increasingly required to review and report on the adequacy of ERM in the organizations they administer, and Implementing Enterprise Risk Management offers operative guidance for creating a program that will pass muster.

Table of Contents

Chapter 1 Enterprise Risk Management Case Studies: An Introduction and Overview

PART 1 Overview and Insights for Teaching ERM
Chapter 2 An Innovative Method to Teaching Enterprise Risk Management: A Learner-Centered Teaching Approach

PART 2 ERM Implementation at Leading Organizations
Chapter 3 ERM at Mars, Incorporated: ERM for Strategy and Operations
Chapter 4 Value and Risk: Enterprise Risk Management at Statoil
Chapter 5 ERM in Practice at the University of California Health System:
Chapter 6 Strategic Risk Management at the LEGO Group: Integrating Strategy and Risk Management
Chapter 7 Turning the Organizational Pyramid Upside Down: Ten Years of Evolution in Enterprise Risk Management at United Grain Growers
Chapter 8 Housing Association Case Study of ERM in a Changing Marketplace
Chapter 9 Lessons from the Academy: ERM Implementation in the University Setting
Chapter 10 Developing Accountability in Risk Management: The British Columbia Lottery Corporation Case Study
Chapter 11 Starting from Scratch: The Evolution of ERM at the Workers’ Compensation Fund
Chapter 12 Measuring Performance at Intuit: A Value-Added Component in ERM Programs
Chapter 13 TD Bank’s Approach to an Enterprise Risk Management Program

PART 3 Linking ERM to Strategy and Strategic Risk Management
Chapter 14 A Strategic Approach to Enterprise Risk Management at Zurich Insurance Group
Chapter 15 Embedding ERM into Strategic Planning at the City of Edmonton
Chapter 16 Leveraging ERM to Practice Strategic Risk Management

PART 4 Specialized Aspects of Risk Management
Chapter 17 Developing a Strategic Risk Plan for the Hope City Police Service
Chapter 18 Blue Wood Chocolates
Chapter 19 Kilgore Custom Milling
Chapter 20 Implementing Risk Management within Middle Eastern Oil and Gas Companies
Chapter 21 The Role of Root Cause Analysis in Public Safety ERM Programs
Chapter 22 JAA Inc.—A Case Study in Creating Value from Uncertainty: Best Practices in Managing Risk
Chapter 23 Control Complacency: Rogue Trading at Société Générale
Chapter 24 The Role of VaR in Enterprise Risk Management: Calculating Value at Risk for Portfolios Held by the Vane Mallory Investment Bank
Chapter 25 Uses of Efficient Frontier Analysis in Strategic Risk Management: A Technical Examination

PART 5 Mini-Cases on ERM and Risk
Chapter 26 Bim Consultants Inc.
Chapter 27 Nerds Galore
Chapter 28 The Reluctant General Counsel
Chapter 29 Transforming Risk Management at Akawini Copper
Chapter 30 Alleged Corruption at Chessfield: Corporate Governance and the Risk Oversight Role of the Board of Directors
Chapter 31 Operational Risk Management Case Study: Bon Boulangerie

PART 6 Other Case Studies
Chapter 32 Constructive Dialogue and ERM: Lessons from the Financial Crisis
Chapter 33 Challenges and Obstacles of ERM Implementation in Poland
Chapter 34 Turning Crisis into Opportunity: Building an ERM Program at General Motors
Chapter 35 ERM at Malaysia’s Media Company Astro: Quickly Implementing ERM and Using It to Assess the Risk-Adjusted Performance of a Portfolio of Acquired Foreign Companies