Student 1: The main intention of this framework is to support large corporate organizations with their portfolio management and process of the risk management. The framework is able to handle insurance risk and non-insurance risk. It is suggested to use the framework within the recognized enterprise risk management correction. James Lam has defined four benefits to risk management which are as follows: handling risk is managements’ job; the instability of the earnings will be reduced by the managing risk; the shareholders’ value can be maximized with the help of managing risk; financial security and job security are promoted by the risk management (Zhou & Xu, 2018) Handling risk is managements’ job–the duty of the management is to use the critical information of the business to manage the risk. This will lead to give transparency in managing costs and improves the understanding of the risk. The instability of the earnings will be reduced by the managing risk–with the help of the activities of the risk management, the top companies will able to manage their earnings instability in a better way. The shareholders’ value can be maximized with the help of managing risk–the companies can be able to increase their shareholders’ value with maximum percentage and also can be able to identify the opportunities for business optimization and risk management by using the risk based program. Volatility can be managed well and business model performance can be extended with correct information that is spread across the organization (Liang et al., 2017) The efficient frontier will be send to the business leaders directly and they will become the holders of the risks for their respective areas of influence. The efficient frontier has to learn the language of the risk. It is fundamentally assumed that the risk transfer and lines of insurance will be modelled properly. This is significant assumption, as plain modelling foibles, internal disputes, information asymmetry and data limitations will be easily disturb the best intentions of the framework. It is very necessary to test any kind of model and if possible back test the model and involvement of different business leaders is also important to examine the results of the model. It is important to involve independent experts to question and examine the assumptions of the model (Tajani & Morano, 2017) References Liang, J., Zhong, M., Zeng, G., Chen, G., Hua, S., & Li, X. et al. (2017). Risk management for optimal land use planning integrating ecosystem services values: A case study in Changsha, Middle China. Science Of The Total Environment, 579(2), 1675-1682. Tajani, F., & Morano, P. (2017). Evaluation of vacant and redundant public properties and risk control. Journal Of Property Investment & Finance, 35(1), 75-100. Zhou, W., & Xu, Z. (2018). Portfolio selection and risk investment under the hesitant fuzzy environment. Knowledge-Based Systems, 144(2), 21-31. Student 2: Uses of Efficient Frontier Analysis.

1. Student 1:
The main intention of this framework is to support large
corporate organizations with their portfolio management and
process of the risk management. The framework is able to
handle insurance risk and non-insurance risk. It is suggested to
use the framework within the recognized enterprise risk
management correction. James Lam has defined four benefits to
risk management which are as follows: handling risk is
managements’ job; the instability of the earnings will be
reduced by the managing risk; the shareholders’ value can be
maximized with the help of managing risk; financial security
and job security are promoted by the risk management (Zhou &
Xu, 2018)
Handling risk is managements’ job–the duty of the management
is to use the critical information of the business to manage the
risk. This will lead to give transparency in managing costs and
improves the understanding of the risk.
The instability of the earnings will be reduced by the managing
risk–with the help of the activities of the risk management, the
top companies will able to manage their earnings instability in a
better way.
The shareholders’ value can be maximized with the help of
managing risk–the companies can be able to increase their
shareholders’ value with maximum percentage and also can be
able to identify the opportunities for business optimization and
risk management by using the risk based program. Volatility can
be managed well and business model performance can be
extended with correct information that is spread across the
organization (Liang et al., 2017)
The efficient frontier will be send to the business leaders
directly and they will become the holders of the risks for their
respective areas of influence. The efficient frontier has to learn
the language of the risk. It is fundamentally assumed that the

2. risk transfer and lines of insurance will be modelled properly.
This is significant assumption, as plain modelling foibles,
internal disputes, information asymmetry and data limitations
will be easily disturb the best intentions of the framework. It is
very necessary to test any kind of model and if possible back
test the model and involvement of different business leaders is
also important to examine the results of the model. It is
important to involve independent experts to question and
examine the assumptions of the model (Tajani & Morano, 2017)
References
Liang, J., Zhong, M., Zeng, G., Chen, G., Hua, S., & Li, X. et
al. (2017). Risk management for optimal land use planning
integrating ecosystem services values: A case study in
Changsha, Middle China. Science Of The Total
Environment, 579(2), 1675-1682.
Tajani, F., & Morano, P. (2017). Evaluation of vacant and
redundant public properties and risk control. Journal Of
Property Investment & Finance, 35(1), 75-100.
Zhou, W., & Xu, Z. (2018). Portfolio selection and risk
investment under the hesitant fuzzy environment. Knowledge-
Based Systems, 144(2), 21-31.
Student 2:
Uses of Efficient Frontier Analysis in SRM Options
SRM – Strategic Risk Management framework is a closed
system, generally it is a continuous cycle with several
opportunities for different parts of an organization which able
to recognize and examines the risk profiles within the strategy-
setting context. With the analytical framework the risk appetite
and risk tolerance notions will be combined with the scenario
and stress testing speaks which were more comprehensive. SRM
framework of decision-makers intended to drive the set of
analytical informed discussions. The organizational strategic
objective was to accelerate or impede creating values with the

3. strategic risk management framework which is mainly focused
on the risks that are made (Bhavsar, 2018).
Strategic objectives, risks that are arising from the plans to
meet the objectives which were untapped. In two aspects the
SRM will serve as a competitive advantage source for decision
making. The first one is objective risks themselves and the other
is to meet the objectives which will arise from risks. Some of
the organizations may include objective risks themselves with
the little considerations that are given to the risks arising from
the plans that able to meet the objectives. The emerging risks
and dynamic risks of the underlying strategy that are evolving
some additional opportunities. Risk appetite and tolerance of
formal statements can be used that knowledge for proper
selection options inefficient frontier (Restemeyer, 2018).
There is a wide variety of options and risk levels where the
options were lying very closer to the frontier and it results in
the more efficient and effective options and thus it results from
the efficient options. We have a similar variety of options that
have risk levels with a tighter range. The efficient frontier slope
results very shallowly. These options will lie to the frontier and
thus it results in inefficient options. For worker's compensation,
the risk appetite was using in an organization. There is a greater
chance of results which would extreme the options (Viscelli,
2017).
References
Bhavsar, T. R., Esbitt, D. L., Yu, P. A., Yu, Y., & Gorman, S.
E. (2018). Planning Considerations for State, Local, Tribal, and
Territorial Partners to Receive Medical Countermeasures From
CDC’s Strategic National Stockpile During a Public Health
Emergency. American Journal of Public Health, 108, S183–
S187. https://doi.org/10.2105/AJPH.2018.304472
Restemeyer, B., van den Brink, M., & Woltjer, J. (2018).
Resilience unpacked - framing of “uncertainty” and
“adaptability” in long-term flood risk management strategies for
London and Rotterdam. European Planning Studies, 26(8),
1559–1579. https://doi.org/10.1080/09654313.2018.1490393

4. Viscelli, T. R., Hermanson, D. R., & Beasley, M. S. (2017). The
Integration of ERM and Strategy: Implications for Corporate
Governance. Accounting Horizons, 31(2), 69–
82. https://doi.org/10.2308/acch-51692
Student 3:
The efficient Frontier analysis figures the bend that plots a
target an incentive against changes to a prerequisite or
imperative. Typical use is for looking at portfolio returns
against various risk levels with the goal that speculators can
amplify execution and limit chance. If you need to utilize this
kind of investigation, you have to characterize a scope of
qualities for a prerequisite or limitation bound.
One use for Efficient Frontier examination is to apportion assets
among an arrangement of interests in the most productive
manner. Financial models and visual techniques are now and
again developed in Economics to represent ideas, for example,
organic market, buyer conduct, or conversion standard
hypothesis.
The Efficient Frontier rearranges a mind-boggling portfolio the
executives' issue by featuring and explaining some fundamental
inquiries all associations are confronting: a shortage of assets,
proficiency of advantage assignment, exchange offs among cost
and worth, open door cost, and the measure of breaking the
imperatives.
The Efficient Frontier is only one necessary piece of a fruitful
portfolio of the board program. Just by then, is it conceivable to
utilize the Efficient Frontier structure to see further and expel
imperatives and to advance the association's benefit
designation.
Recommendations
There is, obviously, no outright set in stone answer suggested
by this procedure – senior administration consistently has an
ultimate conclusion on which portfolio situation to execute. In
any case, for an association wishing to choose the "right"
ventures, it ought to evade impromptu, unstructured techniques,

5. and influence a straightforward and robust procedure, in light of
realities and built from the base up. Just this will guarantee the
correct data is accessible to adjust activities to critical
destinations and to oversee conditions and external factors
effectively.
References
Yang, J., Su, J., & Song, L. (2019). Selection of manufacturing
enterprise innovation design project based on consumer's green
preferences. Sustainability, 11(5), 1375.
Antony, J., & Gupta, S. (2019). Top ten reasons for process
improvement project failures. International Journal of Lean Six
Sigma.
ITS 835
Chapter 22
JAA Inc. – A Case Study in Creating Value from Uncertainty
Enterprise Risk Management
Professor Michael Solomon
Introduction
• Business background
• Initial steps
• Evolution of Risk Management
• Introduction of ISO 31000 and HB 436 to JAA
• Bringing everything together

6. Business Background
• JSS is a clothing wholesaler and retailer
• Founded in 1972
• Went public in 1998
• Three operating segments
• U.S. wholesale
• U.S. retail
• International (wholesale and retail)
• 57 retail stores in 10 countries
Initial Steps
• Strategic objectives
• Maintain market leadership
• Sustain technology leadership
• Strengthen global presence
• Deliver quality service
• A leader in compliance with all laws and regulations
• Establish a governance system
• Multiple committees, each with specific responsibilities
Governance Framework

7. Evolution of Risk Management
• Lack of strategic risk management led to many problems
• Communication
• Missed/lost opportunities
• Lack of commitment to objectives
• Declining quality
• Identified gaps in risk management
• Engaged in aggressive internal training
• Soft skills
• Team building
• Management planning
Introductions of ISO 31000 and HB 436
• JAA adopted ISO 31000
• HB 436 provided extensive implementation guidance
• ISO 31000 was basically an upgrade of the framework
JAA was already using
• ISO 31000 framework formalized JAA’s ERM
• Defined organization and process
Using Context for Risk Criteria

8. Bringing Everything Together
Risk Map
Risk Atitude
ITS 835
Chapter 25
Uses of Efficient Frontier Analysis in Strategic Risk
Management
Enterprise Risk Management
Professor Michael Solomon
Introduction
• Strategic risk management framework
• Modern portfolio theory
• Practical application of risk measurement for insurance
• Sample case study
• Intended uses

9. Strategic Risk Management Framework
• Enables organization to discover risks
• Across organizational boundaries
• Continuous cycle
• Considers interactions of multiple risks
• Combines risk appetite and risk tolerance
• Defines exploitable risks
Strategic Risk Management
Modern Portfolio Theory
• Mathematical model – from 1950s
• Risk is standard deviation
• When portfolio is weighted combination of assets
• Rp – return of portfolio
• Ri – return of asset i
• Wi – weighting of asset i
Practical Application of Risk
Measurement for Insurance
• Purpose is to optimize insurance placements
• And risk limits
• Tail value at risk of loss – TVaRL

10. • Expected value of loss, given that an event has occurred
Sample Case Study
• Three basic risks
• Earthquake exposure to buildings
• Workers’ compensation insurance
• General liability insurance
Portfolio Options
Earthquake Options
Workers’ Compensation Options
General Liability Options
Combined Portfolio Options
Intended Uses

11. • Help large organizations
• Risk management
• Portfolio management
• Insurance and non-insurance risks
• Best fit
• Established ERM