ITS835 Enterprise Risk Management Chapter 30, 31, & 34 Review the chapters from this week’s lesson and provide a 1-2 page summary reflecting on how content

ITS835 Enterprise Risk Management Chapter 30, 31, & 34 Review the chapters from this week’s lesson and provide a 1-2 page summary reflecting on how content from it can be used in your professional career.

Your writeup should include:

1. Title Page

2. Content

3. References

300-350 words ITS 835 ENTERPRISE RISK MANAGEMENT
CHAPTER 30, 31, & 34
MISCELLANEOUS CASE STUDIES ON ERM AND RISK
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1
OVERVIEW
? Three case studies
?
Alleged Corruption at Chessfield
?
Bon Boulangerie
?
Building an ERM Program at General Motors
? Different scenarios and organizations
? Useful in examining broader implications
? Look for similarities
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2
ALLEGED CORRUPTION AT CHESSFIELD
? Chessfield
?
Fictional private American company in sports and
entertainment
?
HQ in NYC
?
“Good ol’ boys” board
? Review included
?
Document review –minimal documentation
?
Interviews – substantial discontent and lack of confidence
in leadership
? CEO compensation
? Informal governance
?
Limited documentation to support decision
? Whistle-blower
?
Basis seemed to be long relationship with decision makers
?
Industry standard metrics missing
?
CEO compensation very high (4x comparable peers)
?
Potential environment for excessive risk taking
? Chessfield CEO requested independent governance
review
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? Risk management
?
Few risk management protocols or controls
?
Most processes were manual (i.e. no IT)
3
CHESSFIELD [CONT’D]
? Review resulted in 45 recommendations
?
43 from reviewer
?
2 added by regulator •
? All but 2 recommendations were accepted, which were
?
3 longest serving board member resign
?
A female be selected for directorship and compensation committee
? Identify broad implications of this case
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4
BON BOULANGERIE
? Bakery in Oakville, Ontario
?
When purchased, single site retail and café
?
Ray Pane added wholesale operation
? Plan to expand wholesale business
?
From 20km to 120km coverage
?
Include grocery stores
?
Add product line
?
Goal: triple profits in 3 years
? What are the operational risks?
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5
BUILDING AN ERM PROGRAM AT GENERAL MOTORS
? Background
? GM approach to ERM
? Game theory
? Looking forward
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6
ERM AT GENERAL MOTORS
? ERM program began in 2010
? ERM to help achieve competitive advantage
?
New CEO
?
GM bankruptcy in 2009
? CRO appointed
?
Financial and Risk Policy Committee formed
? Risk officers identified and aligned to all CEO direct
reports
? GM embraced aggressive ER
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7
GM APPROACH TO ERM
? ERM built on GM’s vision
?
Design, build, and sell the world’s best vehicles
? Identify and manage key risks
?
Bottom-up approach
?
Focus on “what can go right”
? Lessons learned
?
Gave responsibility of assessing risk probability and impact to senior executives
?
Replaced ranked risk list with tiered list
?
Implemented a 5 point scale to measure
?
Inherent risk
?
Current risk
?
Residual risk
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8
GM RISK
MANAGEMENT
PROCESS
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9
INHERENT & RESIDUAL RISK SCALES
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10
RISK
TEMPLATE
EXAMPLE
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11
GAME THEORY
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12
LOOKING FORWARD
? Top risk attention in place
?
Ready to add focus on day-to-day operational risks
? Developing program for operational control self
assessment (CSA)
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? Approach is a policy-based CSA
?
Starts with simple yes-no questions to line managers
? Benefits of a policy-based program
?
Policy can be leveraged to ensure results
?
Helps to educate teams on larger scope objectives
?
Ensures that policies are current and effective
13

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