For Enterprise Risk Management (ERM) to be value creating, it must be
embedded in and connected directly to the enterprise’s strategy – that is
what Strategy @ Risk provides, thus improving ERM through ‘Strategic Risk
and Performance Management’ (SRM).
The S@R models provide:
1. Platform for comprehensive Strategic Risk and Performance
Management and state of the art P&L and Balance simulation
2. The possibility to add uncertainty to all variables and calculations,
enabling valuation and decisions under uncertainty .
S@R gives you the capability to achieve results
through your ERM
Value creation with S@R – Guide to why SRM
should be on top managements agenda
Placing SRM in the corporate risk and finance
lancscape can be tricky. S@R has developed the
necessary methods and tools for securing better
decision making, revealing total risk and
increasing shareholder value towards corporate
The figure depicts the relations between risk
tolerance, the board’s risk indifference curves,
risk appetite, risk capacity and the risk efficiency
The risk efficiency frontier is found as the locus of
upside potential ratios where all unwanted
risk/uncertainty have been mitigated. What is left
is residual risk, assuming that the mitigation is
The enterprise utility function gives the board’s
preferences between risk and value.
(Lower partial moment LPM2)
Shareholder value upside
(Upper partial moment UPM1)
The Board's risk
Risk reduction Risk appetite
Risk efficiency frontier
S@R Value Based Strategic Risk and Performance
1. Enterprise wide – value based with all areas in scope and
supports business decision making
2. All risk categories – financial, operational and strategic
3. Integrated – captures interactivity on a consistent
and integrated basis, at enterprise and
business segment level
4. Finance oriented ‐‐ Ties finance with risk
5. Aggregated – enterprise level risk exposure and appetite
6. Dynamic planning – to develop and evaluate strategies
6. Decision making – not just risk reporting
7. Risk versus return – mitigation and risk exploitation
8. Risk disclosures – integrates ERM information
9. Value impacts – includes enterprise and value of equity
10. Stakeholder focus – not only rating agency driven
The S@R framework for Strategic Risk and
clients a framework and
solution that elevates
the value of ERM and
Be able to apply the
reults for a range of
• Communicate risk
• Act on
• Employ Business
• Test and improve
of the S&R
P&L and Balance
of EBITDA model
Data for balance
value and cost
and value drivers
S@R models create real value and deliver the
insight that makes you capable of improving ERM
Strategic Risk Credit Risk Market Risk Operational Risk
The "Silo" Thinking
Regardless of maturety and
level of ERM in the company.
S@R and leading professionals*
advise an initiative focused on
Strategic Risk Management.
This initiative will create value
and ease the exisiting work in
• Eliminate silos, avoid and
• Reveal risk in meeting
strategic and operational
*Mark L. Frigo and Richard J. Anderson , Kellstadt Graduate
Graduate School of Business, DePaul University Chicago
S@R adds value
• Release resources for other purposes than calculations – gain one tool that
can be used for all types of simulations internally.
• S@R gives you strategic risk management capabilities that can be aligned
with growth strategies, and help companies achieve their business priorities
• Avoid and mitigate risk.
• Achieve integration of strategic planning and risk management.
• Establish risk tolerance for the enterprise, and align risk appetite both for
individual projects/investments as well as for the enterprise.
• Improve ways to assess and analyse risk capacity.
• Align risk management with the overall business strategy, respond to
regulatory demands and improve their modeling and analytics capabilities.
• Create shareholder value from risk management.
• Decide how much risk the investor can take?
• Decide how much risk the investor need to take?
• Evaluate alternative strategic investment options at risk?
• Evaluate equity values and enterprise values in acquisitions at risk?
• Improve predictability in operating earnings at risk that may impact
corporate financial position and performance?
• Identify risk tolerance level?
• Evaluate optimal financial hedging strategies?
• Identify and benchmark an investment portfolio and/or individual
business units’ risk profiles?
• Develop risk mitigating strategies?
• Evaluate the effect of alternative risk retention and risk transfer
Gain insight and analytical power in the
intersection of Risk, Strategy and Finance
S@R Generic Simulation Model
Economic Regime and
Monte Carlo Risk
P & L
A Monte Carlo simulation
model tool that easily links to
your report and consolidation
A customer tailored simulation
model ready to use for a range
of problems. Or standard
friendliness and training of key
We understand, design and
implement with no strain on
the organization – you are up
and running in short time with
our full support.
P&L and Balance Simulation
Profit & Loss
Interval Upper LimitFrequency
Interval Upper Limit
Interval Upper Limit
Interval Upper Limit
0 10 20 80 90 100 110
-65 10 85 160 235 310 385
0 100 200 300 400 5000
In the S@R framework all items, whether
from the profit and loss Account or from
the balance sheet, will have individual
probability distributions (pdf). These pdf’s
are generated by the combination of pdf’s
for the factors of production. Variance will
increase as we move down the items in
the profit and loss account.
Paal Fredrik Olafsen
Phone: +47 90775433
Strategy@Risk is today a provider of
advanced simulation models and services to
Our software, models and services are
thoroughly tested, works flawlessly, and are
used with the satisfaction of clients in
Scandinavia and Europe for over a decade.
Our cutting edge services and models
address, analyze and solve a range of client
problems in the intersection of risk, finance
Making customers better capable to reveal,
analyse, plan, communicate and act on
Strategic risk. This will increase profitability
and stakeholder value.
• State of the art analysis incorporating all
risk and uncertainty factors
• Complete and correct simulation models
based on full accounts, financial and
strategic regime, full cost, income and
• Analysing full effect of strategies on
project level as well as consequences for
• More than 60 different financial reports
• Recommendations and conclusions on
• Full visualization of findings and results
• Tailor made simulation model for client
use – or standard industry models
• Complete data sets for simulations
Phone: +46 708‐89 89 59
A particular slide catching your eye?
Clipping is a handy way to collect important slides you want to go back to later.