SAP Inside Track 2012 enterprise risk management newman v fx
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Presentation from Aug 10, 2012 SAP Inside Track Newtown Square - Enterprise Risk Management using RM10 - Align to your Goals and Actions

Presentation from Aug 10, 2012 SAP Inside Track Newtown Square - Enterprise Risk Management using RM10 - Align to your Goals and Actions

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SAP Inside Track 2012 enterprise risk management newman v fx Presentation Transcript

  • 1. August 10, 2012 SAP Americas HQSAP Inside TrackNewtown Square, PAAugust 10, 2012 Enterprise Risk Management using RM10 – Align to Your Goals and Actions William Newman, MBA, CMC – Managing Principal, Newport Consulting Group
  • 2. Speaker Introduction William D. Newman, CMC, MBA • Managing Principal, Newport Consulting Group • Member, SAP Sustainability Executive Advisory Council • Certified Management Consultant (since 1995) • Over 25 years in industry, professional services • Recognized SAP BusinessObjects Influencer • Adjunct faculty, Northwood University (International Management) • Adjunct faculty, University of Oregon (Sustainability Leadership) • Management Consulting Taskforce (Michigan Assn. of CPAs) • Professional Speaker (American SAP User Group, SAP Insider, TEDx, Sustainable Business Forum, Michigan Assn. of CPAs) TEDx talk at http://www.youtube.com/watch?v=8BmLVpdWvFk • Numerous articles on program oversight, stakeholder engagement, strategy, sustainable supply chain, social media Sessions today based • Twitter (@william_newman) on papers found in • Google+ (+William Newman) • Email wnewman@newportconsgroup.comPage - 2
  • 3. Speaker Introduction See our presentation on Wednesday, September 12: Session 0413: Increase Stakeholder Adoption by Leveraging Mobile Platform ApplicationsPage - 3
  • 4. Discussion Points • Understanding the basis for Enterprise Risk Management • Executive Challenges Aligning to Goals and Actions • SAP Risk Management 10 Platform for ERM • Considerations for Audit Practices • Considerations for functional risk management activities • Links and References • Key Take-away Points • Summary and DiscussionPage - 4
  • 5. Understanding ERM Enterprise Risk Management represents a company-wide approach to risk management activities in a holistic, pragmatic, and managed approach across multiple company operations, functions, and activities. - As abstracted from the Global Accenture Risk Management Report 2011 by Newport Consulting GroupPage - 5
  • 6. Understanding ERM ERM objectives typically include some or all of the following: • Aligning Risk Appetite and Strategy Enterprise risk management • Enhancing Risk Response Decisions (ERM) in business includes the • Reducing Operational Surprises and methods and processes used Losses by organizations to manage • Identifying and Managing Multiple risks and seize opportunities Cross Enterprise Risks • Seizing Opportunities related to the achievement of • Improving Deployment of Capital their objectives. Source: SAP, 2012 as modified by Newport Consulting GroupPage - 6
  • 7. Discussion Points • Understanding the basis for Enterprise Risk Management • Executive Challenges Aligning to Goals and Actions • SAP Risk Management 10 Platform for ERM • Considerations for Audit Practices • Considerations for functional risk management activities • Links and References • Key Take-away Points • Summary and DiscussionPage - 7
  • 8. Executive Challenges Challenges remain as to motive, satisfaction and capabilities… Source: Discontinuity of risk management practices, in terms of demand, satisfaction, and board level understanding (various sources: The Economist Intelligence Unit Survey, Ascending the Maturity Curve (March, 2011); McKinsey Global Survey, Governance since the Economic Crisis (March, 2011); Report on the 2011 Accenture Global Risk Management Study, (February, 2011)Page - 8
  • 9. Executive Challenges … which suggests a certain “call to action” for executives. “Practical knowledge of risk management concepts and principles are needed in the corporate environment as never before, and executives have created demand for this knowledge. How this knowledge is crafted into ERM practices, standards, and guidelines inside of corporate policy is open for revision.” Source: The Executive Dilemma: How to Increase Enterprise Risk Management Performance? GRC Expert, 2012.Page - 9
  • 10. Discussion Points • Understanding the basis for Enterprise Risk Management • Executive Challenges Aligning to Goals and Actions • SAP Risk Management 10 Platform for ERM • Considerations for Audit Practices • Considerations for functional risk management activities • Links and References • Key Take-away Points • Summary and DiscussionPage - 10
  • 11. SAP ERM Platform SAP recognizes there are 3 primary reasons for ERM failure: 1 ERM is not linked to fundamental value drivers of the business 2 Shareholder devaluation occurs based on measuring nonproductive drivers 3 ERM is not focused significantly or deeply enough on the broad “value-killer, fat-tail” risks Source: The Executive Dilemma: How to Increase Enterprise Risk Management Performance? GRC Expert, 2012.Page - 11
  • 12. SAP ERM Platform ILLUSTRATIVE ONLY Source: SAP, 2012.Page - 12
  • 13. SAP ERM Platform Source: SAP, 2012.Page - 13
  • 14. SAP ERM Platform SAP Risk Management 10 allows new “graphical view” to portray bow tie risk formats, including risk drivers, impacts. Source: SAP, 2012.Page - 14
  • 15. SAP ERM Platform The Bow Tie Builder graphical view allows specific risk driver and impact descriptions meaningful to specific organizations. Source: SAP, 2012.Page - 15
  • 16. SAP ERM Platform Risk actions – such as mitigations – may be added from the Bow Tie Builder. Source: SAP, 2012.Page - 16
  • 17. SAP ERM Platform You can identify specific areas of the risk, associated with organizations and processes. A common mitigation action is an audit program, let’s see how RM10 works to support audit programs and functional risk areas. Source: SAP, 2012.Page - 17
  • 18. Discussion Points • Understanding the basis for Enterprise Risk Management • Executive Challenges Aligning to Goals and Actions • SAP Risk Management 10 Platform for ERM • Considerations for Audit Practices • Considerations for functional risk management activities • Links and References • Key Take-away Points • Summary and DiscussionPage - 18
  • 19. Audit Practices Business Audits are gaining popularity as a risk management function across a number of different functions including: • Information Technology (SAS 70, SSAE 16) • Financial Management processes (SOX 404, Dodd-Frank) • Information Use (ITAR, security constraints) • Sustainability (LEED, SA 8000, Natural Step, GRI) • Assurance activities (AA 1000) • Quality Management processes (ISO 9000, CAPA, APQP) • Environmental Management processes (ISO 14000) • Product Compliance Regulations (ROHS, REACH, ELV) • Treasury Management and Currency Exchange (SWIFT) Audits are not just for IT system management anymore!Page - 19
  • 20. Audit Practices Regardless of the business function or processes, most agree the audit format contains several common stages and activities. Planning Execution Findings Corrective Actions Prepare and Pre-audit Initiate Audit Conduct Deliver Exit Distribute Final Assessment Activities Field Work Conference Report Develop Prepare Working Papers Audit FindingsSource: Adapted from IIA, University of Illinois materials, as modified by Newport Consulting Group.Page - 20
  • 21. Audit Practices SAP NetWeaver’s audit management allows full program life cycle management for internal audit activities, including: • Information Technology • Management Systems, and • Financial Operations Note: SAP NetWeaver’s As part of the SAP NetWeaver platform, SAP audit management ships NetWeaver’s audit management connects with the SAP NetWeaver seamlessly with specific SAP modules such as platform as part of the SAP BusinessSuite 7.0 release • SAP ERP Project System • SAP ERP HCM • SAP Risk Management New enhancements are available as part of the SAP BusinessObjects GRC 10.0 release! Source: How SAP Solutions Can Make the Audit Process More Cost-effective, GRC Expert (2011)Page - 21
  • 22. Audit Practices In this example we can associate an Accounts Payable audit with both financial operations and even treasury risks if involving foreign currencies and operating units. Source: How SAP Solutions Can Make the Audit Process More Cost-effective, GRC Expert (2011)Page - 22
  • 23. Audit Practices • During the execution stage of an audit, work papers often suggest corrective or preventive actions in real time. • SAP NetWeaver audit management allows you to identify these work papers and capture remediation actions on the fly so that these can be automatically summarized in the findings report. BusinessObjects Access Control and SAP BusinessObjects Process Control can be used to allow the audit team to have access to in-process documents and records without making this information available to the other members of an organization, until such time as it is formally published. Source: How SAP Solutions Can Make the Audit Process More Cost-effective, GRC Expert (2011)Page - 23
  • 24. Discussion Points • Understanding the basis for Enterprise Risk Management • Executive Challenges Aligning to Goals and Actions • SAP Risk Management 10 Platform for ERM • Considerations for Audit Practices • Considerations for functional risk management activities • Links and References • Key Take-away Points • Summary and DiscussionPage - 24
  • 25. Functional Risk Management Functional Risk Management can look at many areas, including supply chain disruptions due to disasters, business continuity, and sociopolitical risk… Source: Newman, William. Understanding SAP BusinessObjects Enterprise Performance Management, Galileo Press (2010).Page - 25
  • 26. Functional Risk Management … which can then roll-up and into a broader ERM program environment, providing transparency and proactive management. SAP BusinessObjects Supply Chain Performance Management 2.0, which is now in ramp-up, allows for supply chain risks to be mapped to RM10 as part of an overall ERM program portfolio. These risks can also be associated with key risk indicators (KRIs) which can impact financial and operational performance targets. Source: Newman, William. Understanding SAP BusinessObjects Enterprise Performance Management, Galileo Press (2010).Page - 26
  • 27. Functional Risk Management The Supply Chain Council Supply Chain Risk Perspective SCOR model includes a Supply Chain Council SCOR Model supply chain risk perspective (SCRP) which pre-defines risk categories which are common to an Enterprise Risk Management program. The SCOR model and the SCRP framework is structured already inside SCPM 2.0. SAP has earned several awards from the Supply Chain Council for this solution approach. Source: Managing Risk in the Organization Using the SCOR Methodology, Supply Chain Council (2008)Page - 27
  • 28. Functional Risk Management In this example we can link a risk from RM10 into performance measurements and operational data found in SCPM 2.0 Source: Manage Supply Chain Risks Using Supply Chain Management 2.0, GRC Expert (2012)Page - 28
  • 29. Discussion Points • Understanding the basis for Enterprise Risk Management • Executive Challenges Aligning to Goals and Actions • SAP Risk Management 10 Platform for ERM • Considerations for Audit Practices • Considerations for functional risk management activities • Links and References • Key Take-away Points • Summary and DiscussionPage - 29
  • 30. Links and References • Newman, William. Understanding SAP BusinessObjects Enterprise Performance Management, Galileo Press (2010) • Newman, William. Reduce Risk in your Supply Chain with Supply Chain Performance Management, GRC Expert (March 12, 2010) login required • Newman, William. How SAP Solutions Can Make the Audit Process More Cost-effective, GRC Expert (October 4, 2011) login required • Newman, William. Increase Enterprise Risk Management Performance with Risk Management 10.0, GRC Expert (April 18, 2012) login required • Newman, William. The Bow Tie Builder Tool, GRC Expert (May 1, 2012) login required • Newman, William. Supply Chain Management 2.0 Offers Better Integration, Analytics, searchSAP.com (March 21, 2012) • Stackpole, Beth. Deploying Supply Chain Management Software Hinges on Breadth, Depth, Integration, searchManufacturingERP.com (April 18, 2012) • Stackpole, Beth. Ripe with Opportunity, Global Supply Chain also Brings Substantial Risk, searchManufacturingERP.com (March 14, 2012)Page - 30
  • 31. Discussion Points • Understanding the basis for Enterprise Risk Management • Executive Challenges Aligning to Goals and Actions • SAP Risk Management 10 Platform for ERM • Considerations for Audit Practices • Considerations for functional risk management activities • Links and References • Key Take-away Points • Summary and DiscussionPage - 31
  • 32. Key Take-away Points 1. There is a great need for Enterprise Risk Management (ERM) – and a lot of confusion as to what this means. This creates significant opportunity for SAP and its partners. 2. SAP Risk Management 10.0 offers a great platform to build, manage, and assess the effectiveness of an ERM program 3. As part of mitigation activities, organizations are looking towards audits to build these actions into their ERM programs. SAP NetWeaver Audit Management offers easy to use connections into RM10 and other GRC tools. 4. Functional risk management allows deeper dives into specific processes, functions and operational activities in the organization. 5. SAP Supply Chain Performance Management 2.0 – now in ramp up – allows for quick integration to RM10 risk activities while leveraging the Supply Chain Council SCOR model and SCRP framework.Page - 32
  • 33. Discussion Points • Understanding the basis for Enterprise Risk Management • Executive Challenges Aligning to Goals and Actions • SAP Risk Management 10 Platform for ERM • Considerations for Audit Practices • Considerations for functional risk management activities • Links and References • Key Take-away Points • Summary and DiscussionPage - 33
  • 34. Summary and DiscussionPage - 34
  • 35. Thank you for participating.Please feel free provide feedback on this session via chat, email, twitter or on SCN. Visit us and learn more at www.newportconsgroup.com