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Gaurav Sharma
   8800826254
The Strategic Implication of
Enterprise Risk Management
(ERM): A Framework
 This study is carried-out using a case-study research
 design looking at two (2) cases; Infosys and Rolls
 Royce Corp.

 The research is aimed at developing an explanation on
 how ERM brings about the strategic implications or its
 “promise” as it is popularly known the ERM circle.
Findings
 Reported findings, herein, show that a simple linkage
 exists between the ERM processes and its benefits (the
 strategic implications), apparently influenced by
 numerous factors including the risk appetite, risk
 culture, management competence etc.
 The 2009 Risk Management survey5 carried-out by the
   Aon Corporation presents the top ten risks are :
1. Economic slowdown
2. Regulatory/legislative changes
3. Business interruption
4. Increasing competition (new addition to top ten
   since 2007 report)
5. Commodity price risk (new addition to top ten
   since 2007 report)
6. Damage to reputation
7. Cash flow/liquidity risk
8. Distribution or supply chain failure (new
   addition to top ten since 2007 report)
9. Third party liability
10. Failure to attract or retain top talent
WHY ERM
 In the 21st century, there are several checkpoints that have
    considerably driven the need for enterprise risk
    management, which today is referred to as drivers of ERM,
    this includes increase in the following6:
    Greater transparency (Corporate Governance)
    Financial disclosures with more strict reporting and
    control requirement
    Security and technology issues
    Business continuity and disaster preparedness
    Focus from rating agencies
    Regulatory compliance (laws and regulations)
    Globalization in a continuously competitive environment
Enterprise Risk Management at
Infosys (Case 1)
 The risk management framework used by Infosys was
  comprehensive and integrated, an integral part of it
  was its prudential norms which were aimed at limiting
  exposures.
 Its timely availability of information was assured by
  the use of formal reporting and control mechanisms.
Components of the ERM Program
at Infosys
 Internal Environment
    Management Philosophy
    Risk appetite
    Oversight by Board of Directors
    Integrity and ethical values
    Assignment 0f responsibility and authority
    Organizational structure
 Control Activities
 Information and Communication
 Monitoring
 Roles and Responsibilities
ERM at INFOSYS
 The company manages an array of risks with a mixture
  of its own management and standard risk
  management techniques.
 A risk managing culture is evident in its management
  philosophy.
 Infosys carefully selected its businesses to achieve its
  strategic goals.
Enterprise Risk Management at
Rolls Royce (Case 2)


  The board established a structured approach to risk
  management and the risk committee of the board had
  accountability for the system of risk management
  employed, as well as reporting the key risks and the
  associated mitigation actions.
Components of the ERM Program
at Rolls Royce
 Internal Environment
    Management philosophy
    Risk appetite
    Oversight by Board of Directors
 Control Activities
 Information and Communication
 Monitoring
 Roles and Responsibilities
ERM at Rolls Royce
 The company manages an array of risks with a mixture
  of its own management style and standard risk
  management techniques.
 A risk managing culture is evident in its management
  philosophy.
 With Rolls Royce medium risk appetite, Rolls Royce
  continues to strive in a volatile business environment.
Benchmarking the ERM Program
Cross-Comparison of the ERM
Programs
LEARNINGS
 For Better Risk Management it is required to
    Cultivate a risk managing culture that supports
     organizational objectives
    Use of policies and regulations in describing
     management's position, and seminars, on the job
     training, coaching, mentoring, and workshops in
     developing and training staff to adopt ERM
    Integration of ERM in daily business activities
Framework
 NO “one-size-fits all” framework or process for ERM
 A cost effective and less complex framework should be
 created for SME

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Enterprise Risk Management

  • 1. Gaurav Sharma 8800826254
  • 2. The Strategic Implication of Enterprise Risk Management (ERM): A Framework  This study is carried-out using a case-study research design looking at two (2) cases; Infosys and Rolls Royce Corp.  The research is aimed at developing an explanation on how ERM brings about the strategic implications or its “promise” as it is popularly known the ERM circle.
  • 3. Findings  Reported findings, herein, show that a simple linkage exists between the ERM processes and its benefits (the strategic implications), apparently influenced by numerous factors including the risk appetite, risk culture, management competence etc.
  • 4.  The 2009 Risk Management survey5 carried-out by the Aon Corporation presents the top ten risks are : 1. Economic slowdown 2. Regulatory/legislative changes 3. Business interruption 4. Increasing competition (new addition to top ten since 2007 report) 5. Commodity price risk (new addition to top ten since 2007 report) 6. Damage to reputation 7. Cash flow/liquidity risk 8. Distribution or supply chain failure (new addition to top ten since 2007 report) 9. Third party liability 10. Failure to attract or retain top talent
  • 5. WHY ERM  In the 21st century, there are several checkpoints that have considerably driven the need for enterprise risk management, which today is referred to as drivers of ERM, this includes increase in the following6:  Greater transparency (Corporate Governance)  Financial disclosures with more strict reporting and control requirement  Security and technology issues  Business continuity and disaster preparedness  Focus from rating agencies  Regulatory compliance (laws and regulations)  Globalization in a continuously competitive environment
  • 6. Enterprise Risk Management at Infosys (Case 1)  The risk management framework used by Infosys was comprehensive and integrated, an integral part of it was its prudential norms which were aimed at limiting exposures.  Its timely availability of information was assured by the use of formal reporting and control mechanisms.
  • 7. Components of the ERM Program at Infosys  Internal Environment  Management Philosophy  Risk appetite  Oversight by Board of Directors  Integrity and ethical values  Assignment 0f responsibility and authority  Organizational structure  Control Activities  Information and Communication  Monitoring  Roles and Responsibilities
  • 8.
  • 9. ERM at INFOSYS  The company manages an array of risks with a mixture of its own management and standard risk management techniques.  A risk managing culture is evident in its management philosophy.  Infosys carefully selected its businesses to achieve its strategic goals.
  • 10. Enterprise Risk Management at Rolls Royce (Case 2)  The board established a structured approach to risk management and the risk committee of the board had accountability for the system of risk management employed, as well as reporting the key risks and the associated mitigation actions.
  • 11. Components of the ERM Program at Rolls Royce  Internal Environment  Management philosophy  Risk appetite  Oversight by Board of Directors  Control Activities  Information and Communication  Monitoring  Roles and Responsibilities
  • 12.
  • 13. ERM at Rolls Royce  The company manages an array of risks with a mixture of its own management style and standard risk management techniques.  A risk managing culture is evident in its management philosophy.  With Rolls Royce medium risk appetite, Rolls Royce continues to strive in a volatile business environment.
  • 15. Cross-Comparison of the ERM Programs
  • 16.
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  • 19.
  • 20. LEARNINGS  For Better Risk Management it is required to  Cultivate a risk managing culture that supports organizational objectives  Use of policies and regulations in describing management's position, and seminars, on the job training, coaching, mentoring, and workshops in developing and training staff to adopt ERM  Integration of ERM in daily business activities
  • 21. Framework  NO “one-size-fits all” framework or process for ERM  A cost effective and less complex framework should be created for SME