Chapter 3 Mars’ ERM History Mars, Incorporated Is a privately held and migrated to non-family management. Decentralized management Leadership had legacy commitment to risk management ERM was viewed as an evolution COSO versus bespoke approach: COSO – Committee of Sponsoring Organizations structure. Bespoke approach won Phase 1: Failed due to being impractical and overly complex Phase 2: Simpler and targeted Planning Workshops Desire to align senior management goals with ERM. Started with simple template Operating plan initiative sheet: Objective Score Risk column Risk treatment column Management team met to define and rank Risks Risk treatments Changed label from “mitigations” Global Rollout · Used lessons learned from pilot · Each unit has specific nuances · Interviewing GM and CFO together saved subsequent interview time Workshops helped to identify · Gaps in risk management readiness · High-risk initiatives · Ongoing activities with unexpected high risk Reporting Color-coding adds Urgency and Clarity Groups are defined as Clusters Score represents Confidence of meeting goals. Operating Workshops Several ongoing changes Technology · Early-on, process was technology agnostic · Word -> Excel · Excel -> purpose-built software ERM supports aggregation · More complete view of organizational impact of risk Continual template evolution · Added risk treatment owners and due dates Summary Mars received an award for their ERM · Corporate Executive Boards’ “Force of Ideas Award” for ERM Key factors for ERM success · Alignment with Mars’ principles Focus on meeting objectives like Operational and Strategic Flexible Realistic Chapter 5 ERM in Practice at the University of California Health System University of California’s ERM University of California (UC) Health System · Clinics, medical centers, schools · Over 3 million patient visits annually UC Office of the President’s Office of Risk Services · Responsible for ERM UC formally adopted COSO Integrated Framework in 1995 · Committee of Sponsoring Organizations Internal Control Newly hired Chief Risk Officer (CRO) · Experienced in ERM from industry Key Performance Indicator (KPI) · Critical to ERM foundation Technology UC’s approach incorporates technology · ERM information system (ERMIS) Initial phases · Simple risk assessment tools · Dashboards · Control, mitigation, monitoring, survey Dashboard system · Based on KPIs · Visual indicators Premium Rate Program Program to reduce frequency and severity of loss · Professional Liability Prescription Program (PLPP) Encourage risk reduction initiatives · Aimed at reducing cost of risk Rewards units for implementing effective initiatives · Annual rebates for initiatives that work · Driving concept - Everyone is a risk manager ERM and the Center for Health Quality and Innovation · Joint venture to award up to $8 million · Reduce risk of clinical harm to UC surgery patients PHIve Personal health information (PH.