Enterprise Risk Management Framework

1. Enterprise Risk Management Frameworks Business Transformation Value Proposition – Advisory Consulting EA-envision: Enterprise Risk Management Framework Qui ne risque rien n'a rien…..

2. EA-envision Sources Strategic Enterprise Foresight – Strategy & Planning – EA-envision™ Management Framework Future Architecture Landscape ™ Strategic Analysis Five Visions of the Future™ Technology Futures™ Framework Futures Framework Thinking About the Future™ Peter Bishop and Andy Hines University of Houston in Texas™ Eltville Model Five Views of the Future™ Future Management Group™ Horizon Scanning 21 Drivers for the 21st Century™ Outsights™ Applied Future Studies Infinite Futures Wendy Schultz Transhumanism Natasha Vita-More Extropy Institute, President Cultural Strategist Futurist Arts & Culture, Founder Brainstorming Advanced 'Kaleidoscope Businessballs.com Brainstorming'© technique Massive Change The Massive Change Project Bruce Mau Design and the Institute Without Boundaries Foresight and Precognition The Sixth Sense Kees Van der Heijden Precognition Jeffry Palmer Precognition: Sensing the Future Rita Berkowitz, Deborah S. Romaine EA-envision: Strategic Enterprise Management Framework

3. Enterprise Risk Management Frameworks Eltville Model Outsights 21 Drivers for the 21st Centaury COSO Risk Management Framework Basle II Solvency II Sarbanes-Oxley International Financial Reporting Standards EA-envision: Strategic Enterprise Management Framework

4. Futures Studies Foresight – Strategy & Planning – Future Landscape – Advisory Consulting EA-envision: Strategic Enterprise Risk Management Framework Changement est vieux comme le monde….. changement est aussi vieux que le temps.

5. EA-envision The Management of Uncertainty • It has long been recognized that one of the most important competitive factors for any organization to master is the management of uncertainty. • Uncertainty is the major intangible factor contributing towards the risk of failure in every process, at every level, in every type of business. • Managing business uncertainty may involve introducing, developing and implementing strategic enterprise management frameworks for – – Corporate Foresight and Business Strategy – Business Planning and Forecasting – Business Transformation – Enterprise Architecture – Enterprise Risk Management – Enterprise Performance Management – Enterprise Governance, Reporting and Controls EA-envision: Strategic Enterprise Management Framework

6. EA-envision Futures Studies • Futures Studies, Foresight, or Futurology is the practice and art of postulating possible, probable, and preferable futures . Futures studies (colloquially called "Futures" by many of the field's practitioners) seeks to understand what is likely to continue, what is likely to change, and what is novel. Part of the discipline thus seeks a systematic and pattern-based understanding of past and present, and to determine the likelihood of future events and trends. • Futures is an interdisciplinary curriculum, studying yesterday's and today's changes, and aggregating and analyzing both lay and professional strategies, bets and opinions with respect to tomorrow. It includes analyzing the sources, patterns, and causes of change and stability in the attempt to develop foresight and to map possible futures. • Around the world the field is variously referred to as futures studies, strategic foresight, futurology, futuristics, futures thinking, futuring, futuribles (in France, the latter is also the name of the important 20th century foresight journal published only in French), and prospectiva (in Spain and Latin America). Futures studies (and one of its sub-disciplines, strategic foresight) are the academic field's most commonly used terms in the English-speaking world.

7. EA-envision Futures Studies Framework Futures Studies Political Economic Ethnographic & Environmental Science & Strategic Sociology and Science and Futures Demographic Futures Technology Foresight Human Futures Policy Futures Futures Horizons Human Identity. Science and Society Foundations, History History and Culture Futures and Philosophy of Political Science Economic Theory Demographics Earth Sciences 12. Outsights 17. Outsights Prediction Identity Science and Society Future Frameworks, Economic Planning Religion, Values and Bio-Technology and Paradigms, Methods Policy Studies and Strategy Beliefs Psychographics Life Sciences Medical Science & Techniques Future Strategy, Urbanisation and the Philosophy and Sustainability and Sustainability and Planning, Governance, Law Growth of Cities Ethical Studies Ethnographics Renewable Renewable Forecasting, and Order 21. Outsights Resources (1) Resources (2) Modelling & Analysis Urbanisation Peace and Conflict Shaping the Future - Corporate Finance Nano-Technology Studies Psychology and Global Massive Planned and and Strategic Biographics and 1. Outsights War, Patterns of Behaviour Change Managed Outcomes Investment Artificial Intelligence Terrorism, Security Financial Markets Transhumanism Threat Assessment & Information and Military Science and Traded The Arts Risk Management Communication Instruments Natasha Vita-Moore Innovation and Business Communications and Weapons and Entrepreneurial Administration Media Studies Countermeasures Studies Futures Collaboration Networking & Cosmology and Knowledge Space Science Management

8. EA-envision Foresight • In Futures Studies, the term " Foresight" embraces: - – Critical thinking concerning long-term policy development, – Debate and consultation to create wider stakeholder participation, – Shaping the future - by influencing public policy and strategic direction • Foresight is being applied to strategic activities in the public as well as the private sector, and underlines the need to link every activity or project with any kind of future dimension to action today in order to make a planned, integrated future impact (“shaping the future”). • Foresight differs from much futures research and strategic planning. It encompasses a range of approaches that combine the three components mentioned above, which may be recast as: - – futures (forecasting, forward thinking, perspectives), – planning (strategic analysis, priority setting), and – networking (participatory, dialogic) tools and orientations. • Much futures research has been academic, but Foresight programmes were designed to influence policy - often R&D policy. Much technology policy had been very elitist; Foresight attempts to go beyond the normal bounds and gather widely distributed intelligence

9. EA-envision Foresight • Foresight draws on traditions of work in long-range forecasting and strategic planning, horizontal policymaking and democratic planning, horizon scanning and futures studies - but was also highly influenced by systemic approaches to innovation studies, global design, science and technology policy, and analysis of "critical technologies“ and “cultural evolution". • Many of the methods that are commonly associated with Foresight - Delphi surveys, scenario workshops, etc. - derive from the futures field. So does the fact that Foresight is concerned with: - – The longer-term - futures that are usually at least 10 years away (though there are some exceptions to this, especially in its use in private business). Since Foresight is action-oriented (the planning link) it will rarely be oriented to perspectives beyond a few decades out (though where decisions like aircraft design, power station construction or other major infrastructural decisions are concerned, then the planning horizon may well be half a century). – Alternative futures: it is helpful to examine alternative paths of development, not just what is currently believed to be most likely or business as usual. Often Foresight will construct multiple scenarios. These may be an interim step on the way to creating what may be known as positive visions, success scenarios, aspirational futures. Sometimes alternative scenarios will be a major part of the output of Foresight work, with the decision about what fuure to build being left to other mechanisms.

10. EA-envision Strategic Foresight • Strategic Foresight is the ability to create and maintain a high-quality, coherent and functional forward view, and to use the insights arising in useful organisational ways. For example to detect adverse conditions, guide policy, shape strategy, and to explore new markets, products and services. It represents a fusion of futures methods with those of strategic management (Slaughter (1999), p.287). • Strategic Envisioning – Future outcomes, goals and objectives are determined via Strategic Foresight and are defined by design, planning and management - so that the future becomes realistic and achievable. Possible futures may comply with our preferred options - and therefore our vision of an ideal future and desired outcomes could thus be fulfilled – Positivism – articulating a single, preferred vision of the future. The future will conform to our preferred options - thus our vision of an ideal future and desired outcomes will be fulfilled. – Futurism – assessing possible, probable and alternative futures – selecting those futures offering conditions that best fit our strategic goals and objectives for achieving a preferred and desired future. Filtering for a more detailed analysis may be achieved by discounting isolated outliers and focusing upon those closely clustered future descriptions which best support our desired future outcomes, goals and objectives. EA-envision: Strategic Enterprise Management Framework

11. Strategic Foresight Framework EA-envision

12. EA-envision Forecasting • Forecasting is the process of estimation in unknown situations. Prediction is a similar, but more general term. Both can refer to estimation of time series, cross-sectional or longitudinal data. • Usage can differ between areas of application: for example in hydrology, the terms "forecast" and "forecasting" are sometimes reserved for estimates of values at certain specific future times, while the term "prediction" is used for more general estimates, such as the number of times floods will occur over a long period. • Risk and uncertainty are central to forecasting and prediction. Forecasting is used in the practice of in every day business forecasting for manufacturing companies. The discipline of demand planning, also sometimes referred to as supply chain forecasting, embraces both statistical forecasting and a consensus process. • Forecasting is commonly used in discussion of time-series data. EA-envision: Strategic Enterprise Management Framework

13. Forecasting approach - Time series methods • Categories of forecasting methods – Time series methods – Causal / economic methods – Judgemental Methods – Other Methods • Forecasting accuracy • Applications of forecasting • External links • References • Time series methods use historical / time variant data as a mathematical basis for projecting future outcomes. – Moving average – Exponential smoothing – Extrapolation – Linear prediction – Trend estimation – Growth curve EA-envision: Strategic Enterprise Management Framework

14. EA-envision Time series methods – Moving average • In statistics, a moving average or rolling average is one of a family of similar techniques used to analyze time series data. It is applied in finance and especially in technical analysis. It can also be used as a generic smoothing operation, in which case the raw data need not be a time series. • A moving average series can be calculated for any time series. In finance it is most often applied to stock prices, returns or trading volumes. Moving averages are used to smooth out short-term fluctuations, thus highlighting longer-term trends or cycles. The threshold between short-term and long-term depends on the application, and the parameters of the moving average will be set accordingly. • Mathematically, each of these moving averages is an example of a convolution. These averages are also similar to the low-pass filters used in signal processing. EA-envision: Strategic Enterprise Management Framework

15. Time series methods – Exponential smoothing • In statistics, exponential smoothing refers to a particular type of moving average technique applied to time series data, either to produce smoothed data for presentation, or to make forecasts. The time series data themselves are a sequence of observations. The observed phenomenon may be an essentially random process, or it may be an orderly, but noisy, process. • Exponential smoothing is commonly applied to financial market and economic data, but it can be used with any discrete set of repeated measurements. The raw data sequence is often represented by {xt}, and the output of the exponential smoothing algorithm is commonly written as {st} which may be regarded as our best estimate of what the next value of x will be. When the sequence of observations begins at time t = 0, the simplest form of exponential smoothing is given by the formulas • where α is the smoothing factor, and 0 < α < 1.

16. EA-envision Time series methods – Extrapolation • In mathematics, extrapolation is the process of constructing new data points outside a discrete set of known data points. It is similar to the process of interpolation, which constructs new points between known points, but its results are often less meaningful, and are subject to greater uncertainty . • A sound choice of which extrapolation method to apply relies on a prior knowledge of the process that created the existing data points. Crucial questions are for example if the data can be assumed to be continuous, smooth, possibly periodic etc: - – Linear extrapolation – Polynomial extrapolation – Conic extrapolation – French curve extrapolation • Quality of extrapolation - typically, the quality of a particular method of extrapolation is limited by the assumptions about the function made by the method. If the method assumes the data are smooth, then a non-smooth function will be poorly extrapolated. • Extrapolation in the complex plane - in complex analysis, a problem of extrapolation may be converted into an interpolation problem by the change of variable. This transform exchanges the part of the complex plane inside the unit circle with the part of the complex plane outside of the unit circle. In particular, the compactification point at infinity is mapped to the origin and vice versa. Care must be taken with this transform however, since the original function may have had "features", for example poles and other singularities, at infinity that were not evident from the sampled data.

17. Horizon Scanning EA-envision • Horizon Scanning is an important technique for establishing a sound knowledge base for planning and decision-making. Anticipating and preparing for future threats, challenges, trends and opportunities is an essential component of any organisation's long-term sustainability strategy. • What is horizon scanning? Horizon Scanning is defined by the UK Government Office for Science as: 'the systematic examination of potential threats, opportunities and likely future developments, including (but not restricted to) those at the margins of current thinking and planning.‘ • Horizon Scanning may explore novel and unexpected issues as well as persistent problems or trends. The government's Chief Scientific Adviser is encouraging Departments to undertake horizon scanning in a structured and auditable manner. • Horizon Scanning enables organisations to anticipate and prepare for new risks and opportunities by looking at trends and information in the medium- to long-term future. • The government's Horizon Scanning Centre of Excellence, part of the Foresight Directorate in the Department for Innovation, Universities and Skills, has the role of supporting Departmental activities and facilitating cross-departmental collaboration. EA-envision: Strategic Enterprise Management Framework

18. EA-envision 21 Drivers for the 21st Century The Outsights Technique “21 Drivers for the 21st Century” is a provocative and future-orientated scan of the 21 key forces shaping this century - from the rise of the BRICs to the challenges of resource availability and the explosion of information. 1. War, Terrorism and Insecurity 12. Identity 2. Layers of Power 13. Consumerism 3. Economic and Financial Stability 14. Network and Connectivity 4. BRICS and Emerging Powers 15. Space 5. The 5 Flows of Globalisation 16. Science Futures 6. Intellectual Property Rights 17. Science and Society 7. Health 18. Resource Availability 8. Mobility 19. Climate Change 9. Population 20. Environmental Degradation 10. Trust and reputation 21. Urbanisation 11. Values and Beliefs

19. EA-envision Scenarios • Scenarios are specially constructed stories about the future - each one portraying a distinct, challenging and plausible world in which we might one day live and work - and for which we need to anticipate, plan and prepare. • The Outsights Technique emphasises collaborative scenario building with internal clients and stakeholders. Embedding a new way of thinking about the future in the organisation is essential if full value is to be achieved – a fundamental principle of the “enabling, not dictating” approach • The Outsights Technique promotes the development and execution of purposeful action plans so that the valuable learning experience from “outside-in” scenario planning enables building profitable business change. • The Outsights Technique develops scenarios at the geographical level; at the business segment, unit and product level, and for specific threats, risks and challenges facing organisations. Scenarios add value to organisations in many ways: - future management, business strategy, managing change, managing risk and communicating strategy throughout an organisation. EA-envision: Strategic Enterprise Management Framework

20. EA-envision Strategy Scenarios • Strategy Scenarios provide a shared context and clarity on those issues shaping the future in which decision makers can make difficult choices about opportunity exploitation and risk management strategies. • The Outsights Technique helps stakeholders stand back, take stock and seek fresh points of view: - – Facilitation of the internal debate exploring stakeholder value, opportunity exploitation and risk management – Sounding board for business innovation and strategy – Stakeholder engagement and the communication of the process with the wider partner, stakeholder and employee community – Review of specific opportunity exploitation and risk management agendas – Surfacing diverse opinions from internal and external stakeholders to identify needs for strategic content, clarity, perspective and action EA-envision: Strategic Enterprise Management Framework

21. EA-envision Managing Change Scenarios • Strategy Scenarios provide a shared context and clarity on those issues shaping the future in which decision makers can make difficult choices. • Managing Change Scenario thinking can compel a wide range of people to open up to new options and change their own images of reality by sharing and discussing assumptions on what is shaping the world. • The Outsights Technique translates what is learnt into action in the following ways to achieve sustainable change and risk management : - – Providing the content and insight needed to understand changes in the outside world (Drivers of Change, Scenario Building, Risk Categories) – Designing and running processes to push change and risk management down from the organisational level to the individual level – thus delivering personal accountability (Strategy & Planning, Budgeting & Forecasting, Change Management, Risk Management, Performance Management) EA-envision: Strategic Enterprise Management Framework

22. Enterprise Risk Management Frameworks Business Transformation Value Proposition – Advisory Consulting EA-envision: Enterprise Risk Management Framework Qui ne risque rien n'a rien….. …..

23. EA-envision Risk Management • What is Risk Management ? Risk Management is a structured approach to managing uncertainty through foresight and planning. A risk is related to a specific threat (or group of related threats) managed through a sequence of activities using various resources: - • Risk Research – Risk Identification – Risk Prioritization – Risk Assessment – Risk Management Strategies – Risk Planning – Risk Mitigation • Risk Management Strategies may include: - – transferring the risk to another party – avoiding the risk – reducing the negative effect of the risk – accepting part or all of the consequences of a particular risk . • In an ideal Risk Management Scenario, a prioritization process ranks those risks with the greatest potential loss and the greatest probability of occurring to be handled first - and risks with lower probability of occurrence and lower consequential losses are then handled in descending order • In practice this prioritization can be challenging. Comparing and balancing the overall threat of risks with a high probability of occurrence but lower loss - versus risks with higher potential loss but lower probability of occurrence - can often be misleading. EA-envision: Strategic Enterprise Management Framework

24. EA-envision Enterprise Risk Management • Enterprise Risk Management or ERM includes the methods and processes used by organizations to manage risks or seize opportunities related to the achievement of their objectives. Enterprise Risk Management provides a framework for risk management, which typically involves identifying particular events or circumstances relevant to the organization's objectives like risks and opportunities, assessing them in terms of likelihood and magnitude of impact, determining a response strategy, and monitoring progress. By identifying and proactively addressing risks and opportunities, business enterprises protect and create value for their stakeholders, including owners, employees, customers, regulators, and society overall. • Enterprise Risk Management can also be described as a risk-based approach to managing an enterprise, integrating concepts of strategic planning, operations management, and internal control. Enterprise Risk Management is evolving to address the needs of various stakeholders, who want to understand the broad spectrum of risks facing complex organizations to ensure they are appropriately managed. Regulators and debt rating agencies have increased their scrutiny on the risk management processes of companies. EA-envision: Strategic Enterprise Management Framework

25. Enterprise Risk Management Frameworks • Enterprise Risk Management Frameworks describe an approach for identifying, analyzing, responding to, and monitoring risks or opportunities, within the internal and external environment facing the enterprise. Management selects a risk response strategy for specific risks identified and analyzed, which may include: - – Avoidance: exiting the activities giving rise to risk – Reduction: taking action to reduce the likelihood or impact of a risk – Transfer: - sharing or insuring a portion of the risk, to mitigate or reduce it – Accept: no action is taken, due to a cost/benefit decision • Monitoring is typically performed by management as part of its internal control activities, such as review of analytical reports or management committee meetings with relevant experts, to understand how the risk response strategy is working and whether the objectives are being met or targets achieved. EA-envision: Strategic Enterprise Management Framework

26. COSO Enterprise Risk Management Framework • The COSO Enterprise Risk Management Framework has eight Components and four objectives categories. The eight components are: - 1. Internal Environment 2. Objective Setting 3. Event Identification 4. Risk Assessment 5. Risk Response 6. Control Activities 7. Information and Communication 8. Monitoring • The four objectives categories - additional components highlighted are: - 1. Strategy - high-level goals, aligned with and supporting the organization's mission 2. Operations - effective and efficient use of resources 3. Financial Reporting - reliability of operational and financial reporting 4. Compliance - compliance with applicable laws and regulations

27. Enterprise Risk Management Framework Development EA-envision: Strategic Enterprise Management Framework

28. Enterprise Risk Management Framework Development 1. Framing and Scoping the Risk Management Study – Risk Research – evaluating and understanding the problem domain 2. Decide Risk Appetite and Risk Mitigation Strategies – Risk Identification – identifying applicable threats and Risk Categories 3. Determine Risk Organization Structure and Governance Methods – Risk Prioritization – ordering and prioritising threats by probability / magnitude 4. Develop Risk Management Framework Structure, Methods and Metrics – Risk Assessment – comparing and balancing the individual threat posed by each risk item in the ordered and prioritized consolidated enterprise risk register 5. Design Risk Management Framework Reporting and Controls – Risk Planning – assessing the overall threat contained within the risk register 6. Design Risk Management Framework Model and Processes – Risk Management Strategies – transferring, avoiding, reducing or accepting risk 7. Deploy Risk Management Framework Infrastructure and Systems – Risk Mitigation – introduce Risk Management processes, systems and controls 8. Implement Risk Management Framework – Risk Implementation – start managing risk by reducing uncertainty through the targeted application of strategic foresight, planning and forecasting and enterprise risk management processes, systems and controls

29. Enterprise Risk Management Framework

30. EA-envision Executive Summary • The underlying premise of Enterprise Risk Management is that every enterprise exists to provide value for its stakeholders. All entities face uncertainty, and the challenge for management is to determine how much uncertainty to accept as it strives to grow stakeholder value. Uncertainty presents both risk and opportunity, with the potential to erode or enhance value. Enterprise risk management enables management to effectively deal with uncertainty and associated risk and opportunity, enhancing the capacity to build value. • Enterprise Risk Management value is maximized when management sets strategy and objectives to strike an optimal balance between growth and return goals and related risks, and efficiently and effectively deploys resources in pursuit of the enterprise’s objectives. • These capabilities inherent in enterprise risk management help management achieve the enterprise’s performance and profitability targets and prevent loss of resources. Enterprise Risk Management helps ensure effective reporting and compliance with laws and regulations, and helps avoid damage to the enterprise’s reputation and associated consequences. In sum, enterprise risk management helps an enterprise get to where it wants to go, avoiding pitfalls and surprises along the way.

31. EA-envision Executive Summary (continued) • Events – Risks and Opportunities. Events can have negative impact, positive impact, or both. Events with a negative impact represent risks, which can prevent value creation or erode existing value. Events with positive impact may offset negative impacts or represent opportunities. Opportunities are the possibility that an event will occur and positively affect the achievement of objectives, supporting value creation or preservation. Management channels opportunities back to its strategy or objective-setting processes, formulating plans to seize the opportunities. • Enterprise Risk Management defined - Enterprise Risk Management deals with risks and opportunities affecting value creation or preservation – and is described as follows: - – Enterprise Risk Management is a process, implemented by an enterprise’s board of directors, management and other personnel, and is applied both in strategy setting and in every operational activity across the entire enterprise - designed to identify potential threat events that may impact upon the enterprise, to manage those threats within its risk appetite and tolerances - in order to provide reasonable comfort and assurance towards the achievement of operational and strategic enterprise objectives. • This Enterprise Risk Management definition is purposefully broad. It captures key concepts fundamental to how companies and other organizations manage risk, providing a basis for application across organizations, industries, and sectors. It focuses directly on achievement of objectives established by a particular enterprise and provides a basis for defining enterprise risk management effectiveness.

32. EA-envision Executive Summary (continued) • The definition reflects certain fundamental concepts. Enterprise Risk Management is: - – A process group, ongoing and flowing through an entire enterprise – Effected by people at every level within an organization – Applied in strategy setting, planning, forecasting and operational management – Applied across the whole enterprise, at every segment and unit, and includes taking an enterprise level portfolio view of risk – Designed to identify potential events that, if they occur, will affect the enterprise and to manage risk within its risk appetite – Able to provide reasonable Risk Management assurance to an enterprise’s management and board of directors – Geared to achievement of objectives in one or more separate but overlapping categories • This definition is purposefully broad. It captures key concepts fundamental to how companies and other organizations manage risk, providing a basis for application across organizations, industries, and sectors. It focuses directly on achievement of objectives established by a particular enterprise and provides a basis for defining Enterprise Risk Management. EA-envision: Strategic Enterprise Management Framework

33. EA-envision Enterprise Risk Management - Values • Aligning risk appetite and risk management strategy – Management considers the enterprise’s capability to absorb risk (risk appetite) in evaluating strategic alternatives, setting related objectives, and developing mechanisms to manage related risk groups. • Enhancing risk response decisions – Enterprise Risk Management provides the rigor to identify and select among alternative risk scenarios and responses –identification and assessment of threats, risk avoidance, risk reduction, risk sharing and risk acceptance. • Reducing operational surprises and losses – Entities gain enhanced capability to identify potential threat events and establish threat responses - reducing their exposure to surprises and “black swan” events and their associated unplanned costs or losses. • Identifying and managing multiple and cross-enterprise risks – Every enterprise faces a myriad of risks affecting different parts of the organization, and Enterprise Risk Management facilitates effective response to the interrelated impacts, and integrated management of multiple threat scenarios and exposure to groups of related risks. • Seizing opportunities – By considering and mitigating a full range of potential threat events, management is well positioned to identify and proactively realise opportunities. • Improving deployment of capital – Obtaining robust risk exposure information allows management to effectively assess overall capital needs and enhance capital allocation.

34. EA-envision Trade Risk Breakdown Structure EA-envision: Strategic Enterprise Management Framework

35. EA-envision Primary Risk Functions • The primary risk functions in large corporations that may participate in an Enterprise Risk Management program typically include: - – Strategic planning - identifies competitive opportunities and external threats, along with strategic initiatives to address them – Marketing - understands the target customer to ensure product/service alignment with customer requirements – Regulatory and Statutory Compliance – provides governance and monitors compliance with code of conduct and initiates money laundering and fraud investigations – Accounting / Financial Compliance - directs the Sarbanes-Oxley Section 302 and 404 assessment, which identifies financial reporting risks, and Basle II / Solvency II compliance. – Legal Service Department - manages litigation and analyzes emerging legal trends that may impact upon the organization – Insurance - ensures the proper insurance coverage for the organization – Treasury - ensures cash is sufficient to meet business needs, while managing risk related to commodity pricing or foreign exchange EA-envision: Strategic Enterprise Management Framework

36. EA-envision Primary Risk Functions – Operational Quality Assurance - verifies operational output is within tolerances – Operations Management - ensures the business runs day-to-day and that related barriers are surfaced for resolution – Credit Management - ensures any credit provided to customers is appropriate to their ability to repay the advance – Customer Services - ensures customer complaints are handled promptly and root causes are reported to operations for resolution – Information Technology – follows Clinger-Cohen guidelines for due diligence in IT Procurement, implements Intelligent Agents and Alerts, Digital Dashboards and Reporting for Risk Controls and Risk Incident Capture / Event Identification and Risk Monitoring / Reporting – Internal audit - evaluates Risk Event Identification / Incident Capture and Risk Controls and Risk Monitoring and Reporting and directs non- compliance and fraud investigations – Risk Management – maintains the Enterprise Risk Management Framework and evaluates the effectiveness of each of the above risk functions and recommends improvements

37. EA-envision Enterprise Risk Management - Structure • Risk Management is a structured approach to managing uncertainty through foresight and planning. A risk is related to a specific threat (or group of related threats) managed through a sequence of activities using various resources: - – Risk Research – evaluating and understanding the problem domain – Risk Identification – identifying applicable threats – Risk Prioritization – ordering and prioritising threats by risk probability / magnitude – Risk Assessment – comparing and balancing the individual threat posed by each risk item in the ordered and prioritized risk register – Risk Management Strategies – transferring, avoiding, reducing or accepting risk – Risk Planning – assessing the overall threat contained within the consolidated risk register – Risk Mitigation – reducing uncertainty through the foresight and planning process EA-envision: Strategic Enterprise Management Framework

38. Enterprise Risk Management – Structure (continued) • Risk Management strategies may include the following: - – Transferring the risk to another party – Avoiding the risk altogether – Reducing the negative effect of the risk – Accepting part or all of the consequences of any particular risk. • In an ideal Risk Management Scenario, a prioritization process ranks those risks with the greatest potential loss and the greatest probability of occurring to be handled first -and risks with lower probability of occurrence and lower consequential losses are then handled in descending order • In practice this prioritization can be challenging. Comparing and balancing the overall threat of risks with a high probability of occurrence but lower loss - versus risks with higher potential loss but lower probability of occurrence - can often appear misleading.

39. EA-envision Intangible Risk Management • Intangible Risk Management hypothesises a different type of threat - a risk that has a 100% probability of occurring but is ignored by the organization due to the failure to recognise a threat category, or the inability to identify a risk group or specific item: - – Process-engagement Risk may pose a threat when processes are ineffective, incomplete or broken and operational procedures are misapplied (or not applied). – Knowledge Risk may materialise when insufficient knowledge is available in a threat domain, or a deficient level of knowledge is applied to a threat situation,. – Relationship Risk may occur when group dynamics are disrupted, morale breaks down, or communication, collaboration and team-working become ineffective. • Intangible Risk Management allows risk managers to release immediate value from the identification and reduction of those hidden risks that reduce quality and output thus impacting on performance, productivity, profitability and sustainable growth. • Intangible Risks may impact to reduce the productivity of knowledge workers, decrease cost effectiveness, erode performance, service and quality whilst acting to compromise the organisations reputation, goodwill, trust, brand value, market share and earnings. EA-envision: Strategic Enterprise Management Framework

40. EA-envision Opportunity Cost Management • Risk Management also faces difficulties in providing sufficient enterprise resources or allocating those resources appropriately. This is the concept of Opportunity Cost: - – Resources denied to risk management that could have been deployed more profitably on managing and avoiding risk. – Resources over-expended on risk management that could have been spent elsewhere in the business on more profitable applications. • Ideal Risk Management Scenarios minimizes spending whilst maximizing the reduction of the negative effects of risks: - – Prioritisation ranks those risks with the greatest potential loss and / or the greatest probability of occurrence -to be treated first – Those Prioritised Risks with a lower probability of occurrence and lower consequential losses are then handled in descending order – Risk Management seeks to balance and optimise the overall threat impact of risks with a high probability of occurrence but lower loss -versus risks with greater potential loss but lower probability of occurrence

41. EA-envision Establishing the Risk Context • Establishing the risk context involves the following: - – Researching the types of risk apparent in any given interest domain – Identification of all of the risks in the selected domain of interest – Evaluating And Prioritising of all of the risks in the risk domain – Defining a Risk Framework for the E2E risk management approach, activity & strategies – Planning the Risk Framework approach to risk management : - • Mapping out the risk management strategies and process • Determine the scope of the risk management study • Confirm the identity and objectives of stakeholders • Select the basis upon which risks will be evaluated • Manage constraints –time, scope, knowledge, resources. – Developing an Analysis of risks involved in the process. – Mitigation of Risks using all available technological, human and organizational resources and techniques. EA-envision: Strategic Enterprise Management Framework

42. EA-envision Risk Identification After establishing the context, the next step in the process of managing risk is to identify individual potential Threat Scenarios. Risks are threat events that, when triggered, cause problems. Hence, risk identification can start with the source of problems, or with the problem itself. 1. Source analysis Risk sources may be internal or external to the system that is the target of risk management. Examples of risk sources are: stakeholders of a project, employees of a company or the weather over an airport. 2. Problem analysis Risks are related to identified threats. For example: the threat of losing money, the threat of abuse of privacy information or the threat of accidents and casualties. The threats may exist with various entities, most important with shareholders, customers and legislative bodies such as the government. When either source or problem is known, then the events that a source may trigger or the events that can lead to a problem can be investigated. For example: stakeholders withdrawing during a project may endanger funding of the project; privacy information may be stolen by employees even within a closed network; lightning striking a Boeing 747 during takeoff may cause onboard instrumentation to fail…..

43. Risk Identification (continued) EA-envision The chosen method of identifying risks may depend on culture, industry practice and compliance. The identification methods are formed by templates or the development of templates for identifying source, problem or event. Common risk identification methods include: - 3. Objectives-based risk identification Organizations and project teams have objectives. Any event that may endanger achieving an objective partly or completely is identified as risk. Objective-based risk identification is at the basis of COSO's Enterprise Risk Management -Integrated Framework 4. Scenario-based risk identification In scenario analysis different scenarios are created. The scenarios may be the alternative ways to achieve an objective, or an analysis of the interaction of forces in, for example, a market or battle. Any event that triggers an undesired scenario alternative is identified as risk -see Futures Studiesfor methodology used by Futurists. 5. Taxonomy-based risk identification The taxonomy in taxonomy-based risk identification is a breakdown of possible risk sources. Based on the taxonomy and knowledge of best practices, a questionnaire is compiled. The answers to the questions reveal risks. Taxonomy-based risk identification in software industry can be found in CMU/SEI-93-TR-6. EA-envision: Strategic Enterprise Management Framework

44. EA-envision Risk Identification (continued) The chosen method of identifying risks may depend on culture, industry practice and compliance. The identification methods are formed by templates or the development of templates for identifying source, problem or event. Common risk identification methods include: - 6. Common-risk Checking n several industries lists with known risks are available. Each risk in the list can be checked for application to a particular situation. An example of known risks in the software industry is the Common Vulnerability and Exposures list found at http://cve.mitre.org. 7. Risk Charting This method combines the above approaches by listing Resources at risk, Threats to those resources Modifying Factors which may increase or reduce the risk and Consequences it is wished to avoid. Creating a matrix under these headings enables a variety of approaches. One can begin with resources and consider the threats they are exposed to and the consequences of each. Alternatively one can start with the threats and examine which resources they would affect, or one can begin with the consequences and determine which combination of threats and resources would be involved to bring them about. EA-envision: Strategic Enterprise Management Framework

45. EA-envision Risk Management Strategies • Event Risk Management strategies are focused on risks stemming from physical causes like natural disasters or fires, accidents, death • Legal Risk Management strategies are focused on risks stemming from legal causes like lawsuits and prosecution that are mainly operational and due diligence risks. • Financial Risk Management, on the other hand, focuses on risks that can be managed using traded financial instruments like market risks, credit risks, liquidity risks or insurance risks. • The objective of Risk Management is to reduce different risks related to a pre-selected domain to the level accepted by the public, the company, the company's regulator, the shareholders, the board of directors, the risk committee, the management, etc. • Risk may refer to numerous types of threats caused by environment, technology, humans, organizations, regulations, compliances, best practices, standards, methodologies and politics. On the other hand risk involves all means available for humans, or in particular, for a risk management entity like person, staff, organization

46. EA-envision Risk Categories • Operational risk is defined as the risk of loss resulting from broken, inadequate or failed processes, people and systems - or from unforeseen “Black Swan” external actions or events • Credit risk is the risk of loss due to a debtor's non-payment of a loan or other line of credit, either the principal or interest like the coupon or both. • Market risk is the risk that the value of an investment will decrease due to moves in market factors. The four standard market risk factors are: – Equity risk is the risk that asset, instrument, contract, share or stock prices will change – Interest rate risk is the risk that interest rates will change – Currency risk is the risk that foreign exchange rates will change – Commodity risk is the risk that commodity prices like grains, metals, oil, gas, energy etc. will change • Illiquidity risk arises from situations in which a party interested in trading an asset cannot do so because no counterparty in the market wishes to trade for that asset – leading to negative value. • Insurance risk is a risk of failure to meet underwriting criteria for re-insurance. The concept of insurable risk underlies nearly all insurance underwriting decisions. • Reputational risk is the potential for negative publicity or costly litigation, leading to loss of reputation, fall in revenue, defection from the customer base or the loss, imprisonment or exit of key employees or defection or detention of business partners or loss of channels-to-market. • Competitive risk is the possibility of loss from a firm's negative growth in market share, revenue, loss of competitiveness or dominance, or decline in desirability of product and service portfolios due to market shift, competitive pressure or key employee defection to competitors.

47. EA-envision Risk Categories • Strategic Risk Management examines the possibility or risk that a “Black Swan” action or event – an unanticipated or unexpected threat – will adversely affect the firm's ability to achieve its objectives. In this context Strategic Risk Management - managing strategic risk - involves: – identifying key threats as well as strategic assumptions both implicit and explicit and determining the level of strategic vulnerabilities associated with each – making the correct decisions over sustained periods of time that result in maximum value protection and efficient coverage of opportunities – ensuring that the decision-making processes are resilient, robust and effective given the complexity of risk scenarios and uncertainties of the models involved, and – charting a tight and accurate course towards achieving objectives once those decisions are made • Legal risk is the risk associated with the impact on cash flow or debt service of a defect in the contract document – Legal risk in Basel II and Solvency II is included within operational risk • Regulatory risk is the risk associated with the potential for Regulatory Compliance related to changes to rules governing a given type of instrument, market, industry sector or regulatory domain to impact subject contracts, assets, instruments, stocks and investments. • Statutory risk is the risk associated with the potential for Statutory Compliance related to changes to laws and legislation for a given industry, economy, or type of trade to impact upon subject contracts, assets, instruments, stocks and investments. • Systemic risk is the overarching market risk or the threat of risk that cannot be mitigated or diverted, as opposed to "idiosyncratic risk", which is specific to individual contracts, assets, instruments, stocks and investments. It refers to change across the whole market or economy. – Risk of international conflict or war is the probability of loss from threats of global geo-political conflict – Risk of global Massive Global Change is the probability of loss from global climatic and environmental threats

48. EA-envision Risk Identification

49. EA-envision Achievement of Objectives • Within the context of an enterprise’s established mission or vision, management establishes strategic objectives, selects strategy, and sets aligned objectives cascading through the enterprise. This enterprise risk management framework is geared to achieving an enterprise’s objectives, set forth in four categories: - – Strategic – high-level goals, aligned with and supporting its mission – Operations – effective and efficient use of its resources – Reporting – reliability of reporting – Governance – compliance with applicable laws and regulations. • This categorization of enterprise objectives allows a focus on separate aspects of enterprise risk management. These distinct but overlapping categories – a particular objective can fall into more than one category – address different enterprise needs and may be the direct responsibility of different executives. This categorization also allows distinctions between what can be expected from each category of objectives. Another category, safeguarding of resources, used by some entities, also is described EA-envision: Strategic Enterprise Management Framework

50. EA-envision Components of Enterprise Risk Management Enterprise Risk Management consists of eight interrelated components. These are derived from the way management runs an enterprise and are integrated with the management process. These components are: - 1. Internal Environment – The internal environment encompasses the tone of an organization, and sets the basis for how risk is viewed and addressed by an entity’s people, including risk management philosophy and risk appetite, integrity and ethical values, and the environment in which they operate: - 2. Objective Setting – Objectives must exist before management can identify potential events affecting their achievement. Enterprise risk management ensures that management has in place a process to set objectives and that the chosen objectives support and align with the entity’s mission and are consistent with its risk appetite. 3. Event Identification – Internal and external events affecting achievement of an entity’s objectives must be identified, distinguishing between risks and opportunities. Opportunities are channelled back to management’s strategy or objective-setting processes.

51. EA-envision Components of Enterprise Risk Management Enterprise Risk Management components (continued): - 4. Risk Assessment – Risks are analyzed, considering likelihood and impact, as a basis for determining how they should be managed. Risks are assessed on an inherent and a residual basis. 5. Risk Response – Management selects risk responses – avoiding, accepting, reducing, or sharing risk – developing a set of actions to align risks with the entity’s risk tolerances and risk appetite. 6. Control Activities – Policies and procedures are established and implemented to help ensure the risk responses are effectively carried out. 7. Information and Communication – Relevant information is identified, captured, and communicated in a form and timeframe that enable people to carry out their responsibilities. Effective communication also occurs in a broader sense, flowing down, across, and up the entity. 8. Monitoring – The entirety of enterprise risk management is monitored and modifications made as necessary. Monitoring is accomplished through ongoing management activities, separate evaluations, or both.

52. EA-envision Relationship of Objectives and Components • Enterprise risk management is not strictly a serial process, where one component affects only the next. It is a multidirectional, iterative process in which almost any component can and does influence another. • There is a direct relationship between objectives, which are what an entity strives to achieve, and enterprise risk management components, which represent what is needed to achieve them. • The four objectives categories – strategic, operations, reporting, and compliance – are represented by the vertical columns, the eight components by horizontal rows, and an entity’s organisational units by the third dimension. • This depiction portrays the ability to focus on the entirety of a business entity’s Enterprise Risk Management, or by objectives category, component, entity organisation unit, or any subset, dimension, viewpoint or view thereof. • The relationship of risk objectives & components is depicted as a three- dimensional matrix - drawn in the form of a cube.

53. EA-envision Relationship of Objectives and Components • The relationship of the enterprise structure, risk objectives and risk components may be depicted as a three-dimensional matrix - drawn in the form of a cube.

54. Enterprise Risk Management Framework Dimensions • Risk Dimensions • Risk Categories – Risk Categories – Strategic – Risk Components – Operational – Organisation Units – Financial – Risk Management Process – People – Statutory and Regulatory Reporting and Compliance • Risk Components • Risk Management Processes – Threat Environments – Threat Analysis – Objective Setting – Risk Identification – Event Identification – Risk Prioritization – Threat Assessment – Risk Assessment – Threat Response – Risk Management Strategies – Control Activities – Risk Planning – Information and Communication – Risk Mitigation – Monitoring – Risk Communication and Event Reporting – Risk Monitoring and Control EA-envision: Strategic Enterprise Management Framework

55. Operational Risk Operational Risk Value Proposition – Advisory Consulting EA-envision: Strategic Enterprise Management Framework Si nous faisons la même vieille chose, de la même vieille manière, nous obtiendrons toujours les mêmes vieux résultats…..

56. EA-envision Categories Of Risk Categories Of Risk. The risks faced by an organisation should be classified in relation to its unique organisation activities. There are a number of commonly used risk categories which help to group risks according to the various aspects of the organisation and its activities: - The following are examples of some frequently used Risk Categories: - – Strategic – Operational – Operational – Credit – Reporting – Market • Equity Risk – Compliance • Interet Rate Risk • Risk Management and Governance • Currency Risk • Statutory and Regulatory Compliance • Comodity Risk – Liquidity – Financial – Insurance – Human Resources – Reputational – Process – Cumpetitive – Technology – External EA-envision: Strategic Enterprise Management Framework

57. EA-envision Categories Of Risk The list below summarises the most common categories of risk and some indication of the possible effects: - • External Risk – Infrastructure: - transport for staff, power supply, suppliers, business relationships with partners, dependency on internet and email – Economic: - interest rates, exchange rates, inflation – Legal and Regulatory: - e.g. health and safety legislation – Environmental: - fuel consumption, pollution – Political: - possible political constraints like a change of government – Market: - competition and supply of goods – "Act of God“ Natural Disaster: - fire, flood, drought, pandemic, landslide, earthquake, volcanic eruption, tsunami, impact of deep space object • Reputation Risk – Public Reputation: - Reputation, brand loyalty and and goodwill towards the organisation and consequential external effects – Personal Reputation: - Reputation and behaviour of the officers of the organisation and consequential external effects EA-envision: Strategic Enterprise Management Framework

58. EA-envision Categories Of Risk • Internal – Operational / Organisational – Policy: appropriateness and quality of policy decisions – Operational: procedures employed to achieve particular objectives – Information: adequacy of information used for decision making – Transferable: risks that may be transferred, or transfer of risks at inappropriate cost – Technological: use of technology to achieve objectives – Project: project planning and management procedures – Innovation: exploitation of opportunities to make gains – Personnel: availability and retention of suitable staff – Health and Safety: well-being of people

59. EA-envision Categories Of Risk • Financial – Budgetary - availability and allocation of resources – Fraud or theft: - unproductive loss of assets and resources – Insurable - potential areas of loss that can be insured against – Capital investment - making appropriate investment decisions – Liability - the right to sue or be sued in certain circumstances – External Finance (Trade) Risk – Market Risk / Credit Risk / Interest Rate Risk / Liquidity Risk – Internal Finance (Operational) Risk • Internal Reputation – Staff morale and goodwill, internal reputation of the organisation and consequent internal effects EA-envision: Strategic Enterprise Management Framework

60. EA-envision Categories Of Risk • There may be a degree of overlap between some of these categories, they are suggested in order to help ensure that you do not overlook important risks. Try to put each risk in the category, which is most relevant. Some organisations may find they can amalgamate some of these categories and some may find they need extra ones- – Strategic - This allows you to look at external risks, which may affect your organisation such as changes in the environment in which you operate. It also lets you look at setting organisational objectives and ensuring you set the right ones and then meet them. – Operational - This looks at the risks, which arise from the services you deliver or the activities you carry out. – Financial - This covers financial risks facing the organisation in terms of internal systems, planning, funding etc. – People - Review risks associated with both the employment of staff and the involvement of volunteers. – Regulatory - This category looks at the legislative framework within which your organisation operates. – Governance - This category allows you to review the risks, which are part of the management of the organisation. EA-envision: Strategic Enterprise Management Framework

61. EA-envision Risk Categories - examples • Category of Risk Relating to... External Threats – Infrastructure such as transport systems, utilities and power supply systems, suppliers, business relationships with partners, dependency on internet and email service providers – Economic factors such as commodity prices, interest rates, availability of funds and credit, exchange rates, inflation and liquidity risk – Legal and regulatory – statutory regulation which if complied with will reduce risk of litigation (e.g. Clinger-Cohen Act, Sarbanes-Oxley Act) – Environmental Issues such as fuel consumption, pollution – Political - possible political constraints such as change of government – Market Issues such as competition and supply of goods – ‘Act of God’ - natural disasters such as fire, flood, earthquake • Category of Risk Relating to... Human Resources – Recruitment – availability, recruitment and retention of suitable staff, – Personnel – training, motivation and morale of staff – Health and safety – laws and regulations which if complied with should reduce hazards and increase security and well-being of employees EA-envision: Strategic Enterprise Management Framework

62. EA-envision Risk Categories - examples • Category of Risk Relating to... Financial Risk – Budgetary - availability of resources or the allocation of resources – Fraud or theft - unproductive loss of resources – Insurable - potential areas of loss which can be insured against – Capital investment - making appropriate investment decisions – Liability - right to sue or to be sued in certain circumstances • Category of Risk Relating to... Internal Activity Risk – Policy - appropriateness and quality of policy decisions – Strategic - exploitation of opportunities to achieve strategic objectives – Operational - procedures employed to achieve particular objectives – Information - adequacy of information used for decision making – Reputation - public reputation of the organisation and consequent effects – Transferable risks - risks which may be transferred to other parties. Transfer of inappropriate cost risks – Technological - use of technology to achieve objectives – Project - Project planning and management procedures – innovation – Business Transformation Risk - Risk Breakdown Structure

63. EA-envision Project Risk Breakdown Structure • Solution Risk – Requirements – Clarity and Scope – Technology – Selection and Implementation – Performance and Reliability • Business Continuity and Disaster Recovery • Volumes and Capacity • Application and Integration Complexity • Quality and Usability • External Risk – Business Partners, Vendors and Suppliers – Performance and Relationships – Financials – Business Model, Cost Model and Pricing – Compliance - Legal / Contractual and Statutory / Regulatory EA-envision: Strategic Enterprise Management Framework

64. EA-envision Project Risk Breakdown Structure • Project Management Risk – Project Dependencies – Resources and Prioritization – Financials - Budgets and Funding – Timeline – Milestones and Deliverables – Change Management – People, Process and Technology – Compliance – Architecture and Security Principles, Policies and Standards – Customer Satisfaction and Benefits Realisation • Unforeseeable Risk – Internal Threats / Change in Direction – Strategy, Sponsorship, Budgets, Project Cancellation – External Threats – Military, Political, Economic, Industrial, Social, Ecological, Environmental EA-envision: Strategic Enterprise Management Framework

65. EA-envision Organisation Dimensions • Organisation Dimensions • Organisation Categories – Organisation Structure and – Strategic Management Establishment – Operational Management – Jobs and Descriptions – Financial Management – Roles and Responsibilities – Human Resource Management – Human Resources – Statutory and Regulatory Reporting and Compliance • Organisation Components • Organisation – Business Structure – Internal Environment – Enterprise – Objective Setting – Division – Event Identification – Segment – Talent Acquisition – Strategic Business Unit – Talent Management • Organisation – Legal Structure – Control Activities – Enterprise – Information and Communication – Group – Monitoring – Company – Subsidiary EA-envision: Strategic Enterprise Management Framework

66. EA-envision Organisation – Business Structure EA-envision: Strategic Enterprise Management Framework

67. EA-envision Strategic Business Units Defined • Why Strategic Business Unit Structure? – A Strategic Business Unit is agile, flexible, responsive and highly focused. It has a very strong internal synergy and exists to exploit highly specific business opportunities and associated revenue streams. • Strategic Business Unit Defined – A Strategic Business Unit is a business unit having a clear set of customers and competitors. An SBU can be independently planned / managed within the organization and has profit and loss responsibility – Composition varies from enterprise to enterprise. In larger organizations, an SBU could be a company, a product, a range or a complete product line. In smaller organizations, it might be the entire enterprise. • Strategic Business Unit – Although SBUs vary dramatically in size, form and function they all share some common characteristics. Every SBU is an enterprise business unit that is tasked to develop business strategies and investment plans targeted at generating highly focused business opportunities and associated revenue streams. • is either a single business or collection of closely related businesses with strong internal synergy • has its own clearly identifiable strategy, investment plan, products, customers and competitors • has at its head a single manager who is accountable for its entire operations and performance • is a business unit that can be independently planned and managed within the organization – all SBUs are a single business (or collection of businesses), have their own products, customers competitors and a manager accountable for operations, and can be independently planned / managed

68. EA-envision Business Segments Defined • Why Divisional Structure? – As organizations grow larger, they become less agile, focused, flexible or responsive and more remote. They distance people from each other, and begin to consume more cash and energy than they release. • Division Defined – A Group or Division is a business segment containing a number of logically related SBUs . A division has internal investment responsibility within the enterprise and provides central services to its “client” SBUs. – Segmental scope varies from organization to organization. In larger organizations, a segment could be a company group, division - or a complete product range. In smaller organizations, it might be the plc. • Business Segment – Segments are a collections of businesses that have their own investment strategies and an executive board accountable for operational performance. They can be independently invested or divested. – Divisions are significant organization segments that are targeted to develop organizational investment strategies aimed at generating multiple, logically related future business opportunities / revenue streams. • is a collection of logically related and coordinated strategic business units • has its own clearly identifiable purpose and identity along with internal synergies and cohesion • has at its head an executive board accountable for investment decisions and performance • is a business area that can be independently planned for and managed within the organization

69. Business Programmes – the challenge EA-envision • Business Programmes – Business Transformation Programmes and their associated Processes, Enterprise Services, COTS Applications and Integration Architecture are very complex, high cost / high risk investments and are becoming increasingly difficult to understand and manage. They encompass a huge mass of detail and depend upon the success of a large number of embedded, mission-critical business and technology decisions. • Enterprise Architecture – There is an overarching responsibility to understand the many impacts of these decisions and get them right first time – or risk potentially catastrophic business interruption or failure if we get these decisions wrong. A structured Enterprise Architecture and Service-oriented Architecture Framework guides us successfully through architecting, designing and delivering Enterprise Services via the Enterprise Service Bus. EA-envision: Strategic Enterprise Management Framework

70. Business Transformation Risk Breakdown Structure

71. EA-envision Business Transformation • What are the detailed business strategies of the enterprise and how should these be implemented (Business Strategy Development and Organizational Change) ? – Business Strategy Development: - Mission – Businesses Drivers – Strategies – Outcomes – Goals – Objectives • What processes the enterprise executes, how they are integrated, and how they contribute to the strategy of the organization (Business Process Management) ? • How human resources are being utilized and whether there is optimum use of skills and resources available across processes and functions (Human Resource Management) ? • To what extent the organization establishment is a proper reflection of appropriate roles and responsibilities, in order to effectively and efficiently carry out all work (Organization Management) ? • What IT applications are available in the enterprise , how they interface and what processes and functions they support (IT Portfolio Management) ? • How the performance of each process, each function and each individual (CSF’s, KPI’s and metrics) adds up to the organization’s overall performance (Enterprise Performance Management) ? • What business and technology projects are currently underway, how they enable business change, what processes and IT applications do they change and have impact upon and how this contributes to the strategy of the organization (Business Program Management and Project Portfolio Management) ? – Strategic Technology Enablers: - ERP – CRM – Process Orchestration – Collaboration – Enterprise Services EA-envision: Strategic Enterprise Management Framework

72. Systemic Risk Systemic Risk Value Proposition – Advisory Consulting EA-envision: Strategic Enterprise Management Framework Si nous faisons la même vieille chose, de la même vieille manière, nous obtiendrons toujours les mêmes vieux résultats…..

73. External Threats External Threats Military Political Economic Social Demographic Technology Environment Federations and Trust and Technology War Identity Population Geographic Alliances Reputation Futures National Networking and Information and Terrorism Layers of Power Economic Health Climate Change Connectivity Communication Stability Weapons and Lawlessness and Financial Markets Ecological National Security Mobility Wealth Countermeasure Civil Unrest Stability Degradation s Extremism and BRICS and Consumerism Urbanization Science Futures Natural Disasters Polarisation Emerging Powers Sustainability and Values and Individualism and Globalization Renewable Geological Beliefs Tribalism Resources Fashion and Aspirations and Oceanography Natural Trends Desires and Space Resources Cosmology and History and Deep Space Culture Objects

74. EA-envision Global Massive Change • Global Massive Change is an evaluation of global capacities and limitations. It encompasses both utopian and dystopian possibilities of the emerging world future state, in which climate, the environment, ecology and geology are dominated by human manipulation: - – Human impact is now the major factor in climate change. – Species extinction rate is now greater than in the late Permian mass extinction event – in which 90% of all species were eliminated – Man now moves more rock and earth than do all geological processes.

75. Climate Change • Most scientists agree that global warming presents the greatest threat to the environment. There is little doubt that the Earth is heating up. In the last century the average temperature has climbed about 0.6 degrees Celsius (about 1 degree Fahrenheit) around the world. • From the melting of the ice cap on Mount Kilimanjaro, Africa's tallest peak, to the loss of tropical coral reefs as oceans become warmer, the effects of global warming are often clear. Just as the evidence is irrefutable that temperatures have risen in the last century, it's also well established that carbon dioxide in the Earth's atmosphere has increased about 30 percent, enhancing the atmosphere's ability to trap heat. • The exact link, if any, between the increase in carbon dioxide emissions and the higher temperatures is still under debate. Most scientists believe that humans, by burning fossil fuels such as coal and petroleum, are largely to blame for the increase in carbon dioxide. But some scientists also point to natural causes, such as volcanic activity. • The current rate of warning is unprecedented, however. It is apparently the fastest warming rate in millions of years, suggesting it probably is not a natural occurrence. And most scientists believe the rise in temperatures will in fact accelerate. The United Nations-sponsored Intergovernmental Panel on Climate Change (IPCC) reported in 2001 that the average temperature is likely to increase by between 1.4 and 5.8 degrees Celsius (2.5 and 10.4 degrees Fahrenheit) by the year 2100.

76. Climate Change • Since our entire climatic system is fundamentally driven by energy from the sun, it stands to reason that if the sun's energy output were to change, then so would the climate. Since the advent of space-borne measurements in the late 1970s, solar output has indeed been shown to vary. With now 28 years of reliable satellite observations there is confirmation of earlier suggestions of an 11 (and 22) year cycle of irradiance related to sunspots but no longer term trend in these data. • Based on paleoclimatic (proxy) reconstructions of solar irradiance there is suggestion of a trend of about +0.12 W/m2 since 1750 which is about half of the estimate given in the last IPCC report in 2001. There is though, a great deal of uncertainty in estimates of solar irradiance beyond what can be measured by satellites, and still the contribution of direct solar irradiance forcing is small compared to the greenhouse gas component. However, our understanding of the indirect effects of changes in solar output and feedbacks in the climate system is minimal. There is much need to refine our understanding of key natural forcing mechanisms of the climate, including solar irradiance changes, in order to reduce uncertainty in our projections of future climate change.

77. Climate Change • In addition to changes in energy from the sun itself, the Earth's position and orientation relative to the sun (our orbit) also varies slightly, thereby bringing us closer and further away from the sun in predictable cycles (Milankovitch Cycles). Variations in these cycles are believed to be the cause of Earth's ice-ages (glacial episodes). One factor of particular importance for the development of glaciations is the amount of radiation received at high northern latitudes in the summer. • Diminishing radiation at these latitudes during the summer months would have enabled winter snow and ice cover to persist throughout the year, eventually leading to a permanent snow- or icepack. Over several centuries, it may be possible to observe the effect of these orbital parameters. While Milankovitch Cycles have tremendous value in explaining ice-ages and long-term climatic changes on the earth, there are other factors which have very high impact on the decade-century timescale. However for the prediction of climate change in the 21st century, these long-term factors will be far less significant than other changes - such a radiative forcing from greenhouse gases.

78. Climate Change • Indirect indicators of global warming such as ice borehole temperatures, snow cover, and glacier recession data, are in substantial agreement with the more direct indicators of recent warmth. Evidence such as changes in glacial mass balance (the amount of snow and ice contained in a glacier) is useful since it not only provides qualitative support for meteorological data, but glaciers are often found in places too remote to support meteorological stations. The records of glacial advance and retreat often extend back further than weather station records, and glaciers are usually at much higher altitudes than weather stations, allowing scientists more insight into temperature changes prevalent higher in the atmosphere - though extending the Antarctic sea-ice record back in time is more difficult due to the lack of direct observations in this part of the world. • Large-scale measurements of sea-ice have only been possible since the satellite era, but through looking at a number of different satellite estimates, it has been determined that September Arctic sea ice has decreased between 1973 and 2007 at a rate of about -10% +/- 0.3% per decade. Sea ice extent for September for 2007 was by far the lowest on record at 4.28 million square kilometres, eclipsing the previous record low sea ice extent by 23%. Sea ice in the Antarctic has shown very little trend over the same period, or even a slight increase from 1979 to 1995. • In 1995, however, Larsen Ice Shelf A disintegrated. In 2002 the whole of the Larsen Ice Shelf B disappeared in just a few weeks – an area the size of Rhode Island in the USA. The mechanism is thought to be summer liquid water pooling at the surface, filtering down cracks and crevices and subsequently freezing – shattering the ice sheet

79. Glacial Ice Mass Balance

80. Sea Ice Extent

81. Global Warming • Clouds are an important indicator of climate change. Surface-based observations of cloud cover suggest increases in total cloud cover over many continental regions – including areas of increased urbanization such as tropical Africa and southern Asia. This increase since 1950 is consistent with regional increases in precipitation for the same period. However, despite regional variation, analyses of cloud cover over land for the period 1976- 2003 shows little statistically significant overall global change. • An enhanced greenhouse effect would be expected to cause cooling in higher parts of the atmosphere because the increased "blanketing" effect in the lower atmosphere holds in more heat, allowing less to reach the upper atmosphere. Cooling of the lower stratosphere (about 49,000-79,500 ft.) since 1979 is shown by both satellite Microwave Sounding Unit and weather balloon data, but is larger in weather balloon data (most likely this is due to unidentified / uncorrected data errors). • Relatively cool surface and tropospheric temperatures, and a relatively warmer lower stratosphere, were observed in 1992 and 1993, due to atmospheric volcanic dust following the 1991 eruption of Mount Pinatubo. The warming reappeared in 1994. A dramatic global warming took place in 1998 - at least partly associated with the record El Niño. This warming episode was consistent from the surface right to the top of the troposphere.

Enterprise Risk Management Framework

Nigel Tebbutt

Enterprise Risk Management Framework