This document provides a summary of a report on managing risk in challenging economic times. It makes the following key points:
1. Risk managers at financial institutions warned of growing risks in the years leading up to the financial crisis but lacked the authority to curb excessive risk-taking driven by profit motives.
2. The report examines 10 practical lessons for improving risk management practices, including giving risk managers greater authority, ensuring risk expertise at senior levels, and balancing risk factors across all business units.
3. Interviews with industry and academic experts informed the report's findings. It provides questions for companies outside of finance to consider regarding their own risk governance and risk oversight practices.
Managing Risk in Perilous Times- Practical Steps to Accelerate RecoveryFindWhitePapers
The document discusses lessons that can be learned from the financial crisis regarding effective risk management. It argues that risk management needs greater authority, senior executive leadership, and sufficient risk expertise at high levels. It also stresses the importance of combining quantitative risk model outputs with human judgment, paying attention to the quality of data used in models, and using stress testing and scenario planning to prepare for potential risks and events.
An Enterprise Risk Management (ERM) programme can help organizations achieve strategic objectives more effectively by taking a systematic approach to identifying, assessing, and addressing risks across the whole organization rather than operating in silos. Key aspects of an effective ERM programme include linking risk strategy to business strategy, establishing clear risk management responsibilities, and using risk information to improve decision-making and investment choices. Regular risk assessment and monitoring can optimize risk management and control activities while supporting organizational learning and competitiveness.
This document provides an introduction to enterprise risk management (ERM). It discusses how ERM aims to protect and increase value for an organization by taking an integrated approach to managing risks across the entire enterprise. ERM calls for high-level oversight of all risks on a portfolio basis. The document provides background on the evolution of risk management and outlines some of the key risks organizations face today from globalization and other factors. It also notes that chief risk officers and risk committees are important for overseeing ERM.
This document provides an introduction to risk management concepts. It defines risk as a compound measure of probability and magnitude of adverse effects. It notes that risk involves uncertainty about future events and potential for loss. The document discusses different types of risks like known risks, predictable risks, and unpredictable risks. It also distinguishes between fundamental or macro risks that affect large numbers of people versus particular or micro risks that individuals can partially control. Finally, it covers topics like pure risks versus speculative risks, diversifiable versus non-diversifiable risks, and risk measures used in portfolio theory.
Enterprise risk management (ERM) takes a comprehensive, top-down approach to identifying and managing an organization's risks. It considers strategic, operational, pure and speculative risks across the entire organization rather than managing risks in silos. A typical ERM process involves identifying benefits, acquiring board support, developing risk procedures, determining risk appetite, and fostering a risk-aware culture. Barriers to effective ERM include difficulties defining risk appetite and a lack of requests to change risk management approaches. The 2012 Super Bowl in Indianapolis demonstrated how ERM can be applied to large-scale event planning and produce positive results. Future adoption of ERM may be slow as it is considered a "soft" aspect, but its principles are becoming
Enterprise Risk Management (ERM); From theory to practiceSegun Ogunwale
This document outlines the theory and practice of enterprise risk management (ERM). It discusses how ERM works differently in private versus public sector organizations due to differences in goals and risk tolerance. The document proposes a framework for implementing ERM with five phases: risk governance, risk assessment, risk quantification, risk monitoring and reporting, and risk optimization. It also describes steps to implement ERM such as obtaining buy-in, building an ERM foundation, conducting risk assessments, ongoing monitoring, and developing reporting. Roadblocks to implementation like resistance to change are also addressed.
This document summarizes the key findings of a survey conducted by Harvard Business Review Analytic Services on leadership in risk management at European companies. The main points are:
1) Responsibility for risk management is increasingly concentrated at the top levels, with either the CRO, CEO/CFO, or board having direct responsibility at many companies.
2) Companies are emphasizing strong board engagement and regular communication with the C-suite on risk exposures. However, communication between the C-suite and CRO needs improvement at some companies.
3) While risk management is aligning with company strategies, companies are making less progress integrating it into strategic projects like mergers. Adopting risk-based incentives is also slow
This document discusses risk management in the life insurance industry. It provides an overview of enterprise risk management (ERM), how risk management has evolved globally and in India, and the future of risk management. Key points include:
- ERM takes a holistic approach to risk management across the entire company rather than operating in silos. It helps optimize business performance through risk-based decision making.
- Globally, risk management is increasingly important with the adoption of solvency regulations like Solvency II in Europe and risk-based capital standards. India currently follows a formula-based Solvency I approach but is showing increased interest in risk management.
- The future of risk management in India involves greater
Managing Risk in Perilous Times- Practical Steps to Accelerate RecoveryFindWhitePapers
The document discusses lessons that can be learned from the financial crisis regarding effective risk management. It argues that risk management needs greater authority, senior executive leadership, and sufficient risk expertise at high levels. It also stresses the importance of combining quantitative risk model outputs with human judgment, paying attention to the quality of data used in models, and using stress testing and scenario planning to prepare for potential risks and events.
An Enterprise Risk Management (ERM) programme can help organizations achieve strategic objectives more effectively by taking a systematic approach to identifying, assessing, and addressing risks across the whole organization rather than operating in silos. Key aspects of an effective ERM programme include linking risk strategy to business strategy, establishing clear risk management responsibilities, and using risk information to improve decision-making and investment choices. Regular risk assessment and monitoring can optimize risk management and control activities while supporting organizational learning and competitiveness.
This document provides an introduction to enterprise risk management (ERM). It discusses how ERM aims to protect and increase value for an organization by taking an integrated approach to managing risks across the entire enterprise. ERM calls for high-level oversight of all risks on a portfolio basis. The document provides background on the evolution of risk management and outlines some of the key risks organizations face today from globalization and other factors. It also notes that chief risk officers and risk committees are important for overseeing ERM.
This document provides an introduction to risk management concepts. It defines risk as a compound measure of probability and magnitude of adverse effects. It notes that risk involves uncertainty about future events and potential for loss. The document discusses different types of risks like known risks, predictable risks, and unpredictable risks. It also distinguishes between fundamental or macro risks that affect large numbers of people versus particular or micro risks that individuals can partially control. Finally, it covers topics like pure risks versus speculative risks, diversifiable versus non-diversifiable risks, and risk measures used in portfolio theory.
Enterprise risk management (ERM) takes a comprehensive, top-down approach to identifying and managing an organization's risks. It considers strategic, operational, pure and speculative risks across the entire organization rather than managing risks in silos. A typical ERM process involves identifying benefits, acquiring board support, developing risk procedures, determining risk appetite, and fostering a risk-aware culture. Barriers to effective ERM include difficulties defining risk appetite and a lack of requests to change risk management approaches. The 2012 Super Bowl in Indianapolis demonstrated how ERM can be applied to large-scale event planning and produce positive results. Future adoption of ERM may be slow as it is considered a "soft" aspect, but its principles are becoming
Enterprise Risk Management (ERM); From theory to practiceSegun Ogunwale
This document outlines the theory and practice of enterprise risk management (ERM). It discusses how ERM works differently in private versus public sector organizations due to differences in goals and risk tolerance. The document proposes a framework for implementing ERM with five phases: risk governance, risk assessment, risk quantification, risk monitoring and reporting, and risk optimization. It also describes steps to implement ERM such as obtaining buy-in, building an ERM foundation, conducting risk assessments, ongoing monitoring, and developing reporting. Roadblocks to implementation like resistance to change are also addressed.
This document summarizes the key findings of a survey conducted by Harvard Business Review Analytic Services on leadership in risk management at European companies. The main points are:
1) Responsibility for risk management is increasingly concentrated at the top levels, with either the CRO, CEO/CFO, or board having direct responsibility at many companies.
2) Companies are emphasizing strong board engagement and regular communication with the C-suite on risk exposures. However, communication between the C-suite and CRO needs improvement at some companies.
3) While risk management is aligning with company strategies, companies are making less progress integrating it into strategic projects like mergers. Adopting risk-based incentives is also slow
This document discusses risk management in the life insurance industry. It provides an overview of enterprise risk management (ERM), how risk management has evolved globally and in India, and the future of risk management. Key points include:
- ERM takes a holistic approach to risk management across the entire company rather than operating in silos. It helps optimize business performance through risk-based decision making.
- Globally, risk management is increasingly important with the adoption of solvency regulations like Solvency II in Europe and risk-based capital standards. India currently follows a formula-based Solvency I approach but is showing increased interest in risk management.
- The future of risk management in India involves greater
This document discusses enterprise risk management (ERM) frameworks at two companies - Infosys and Rolls Royce. It finds that both companies manage risks through a mixture of internal management techniques and standard risk management processes. A risk managing culture is evident in both companies' management philosophies. The ERM programs at both include components like internal environment oversight, control activities, information/communication, and monitoring roles.
Abstract: Risk management is an activity which integrates recognition of risk, risk assessment, developing strategies to manage it, and mitigation of risk using managerial resources. Some traditional risk managements are focused on risks stemming from physical or legal causes (e.g. natural disasters or fires, accidents, death). Financial risk management, on the other hand, focuses on risks that can be managed using traded financial instruments. Objective of risk management is to reduce different risks related to a pre-selected domain to an acceptable. It may refer to numerous types of threats caused by environment, technology, humans, organizations and politics. The paper describes the different steps in the risk management process which methods are used in the different steps, and provides some examples for risk and safety management.
This document summarizes the key concepts of enterprise risk management. It discusses how risk management aims to help organizations achieve their mission and avoid surprises by dealing with uncertainty. The risk management process involves identifying potential risks, evaluating and prioritizing them, selecting risk management techniques, and monitoring risks. The roles of the board, senior management, and risk management committee in the risk management process are also outlined.
Thoughts on Direction of Ops Risk Management -V4 0Amrut Joshi
The document discusses risk management and operational risk. It provides context on the tumultuous global economic environment of the last decade which brought focus to risk management. However, some question if current risk management practices are adequate given failures still occurred. The document then discusses various studies on risk management and findings that risks are about human decisions. Therefore, influencing business decisions is important to manage risks and avoid failures. It introduces the concept of "behavioural risk management" and capturing the experience of being embedded within business to influence decisions from the first line of defence.
A structured approach to Enterprise Risk Management (ERM) and the requirement...Hassan Zaitoun
This document provides a structured approach to implementing enterprise risk management (ERM) based on ISO 31000. It discusses key risk management principles, including defining risk, establishing a risk management process, and creating a risk-aware culture. The document advocates developing a risk architecture, strategy, and protocols to provide proper context for risk activities. It also summarizes ISO 31000's risk management process of risk identification, evaluation, response, resourcing, reaction planning, and reporting.
This document summarizes a presentation on leading risk culture change by Linda Conrad of Zurich, Paul Walker of St. John's University, and Johan Willaert of Agfa Corporate Center. It discusses establishing leadership support for enterprise risk management (ERM), defining the scope of risk initiatives, mapping strategic risks, conducting risk assessments, setting action plans, and periodically reviewing risk management processes. The presentation emphasizes aligning ERM with business strategy, quantifying risks, gaining senior management buy-in, and communicating with stakeholders to develop a proactive risk culture.
Enterprise Risk Management and SustainabilityJeff B
An overview of our endeavors at implementing ISO 31000 enterprise risk management and the importance of establishing good risk culture within the company.
Dtt Fsi Global Risk Management Survey Fifth Editionbartonp
The document is a summary of findings from Deloitte's fifth global risk management survey of 130 financial institutions with nearly $21 trillion in total assets. Key findings include:
1) Risk management oversight has risen to the board level at 70% of institutions compared to 59% in 2004.
2) 84% of institutions now have a Chief Risk Officer compared to 65% in 2002.
3) Institutions rate themselves most effective at managing traditional risks like market, credit, and liquidity, and less effective at newer risks like operational and geopolitical risks.
4) Only 35% of institutions have fully implemented enterprise-wide risk management programs.
The document compares three major risk management frameworks: NIST, ISO, and COSO. NIST focuses on information security and risk management for US federal systems. ISO provides generic international guidelines for diverse organizations. COSO emphasizes internal controls and accurate reporting. While the frameworks differ in scope and focus, they all aim to guide organizations in managing risks through integrated strategies. Organizations should analyze features of each to determine the best combination for their unique needs and objectives.
Sharing Practice on Enterprise Risk Management (ERM)Diane Christina
The document discusses enterprise risk management (ERM). It provides an example ERM universe that includes strategic risks, physical assets risks, human factors risks, and financial risks. It also discusses some key aspects of effective ERM implementation, including establishing a risk governance framework, developing a risk management infrastructure, and following a risk management process of identifying, assessing, managing, and monitoring risks. The document is intended to share practices on ERM.
The document discusses the risk management process, which consists of 5 steps: 1) identifying risks, 2) analyzing risks, 3) prioritizing risks, 4) treating risks, and 5) monitoring risks. It provides details on each step, such as how to identify potential risks, analyze their scope and severity, rank their priority, implement solutions to address risks, and continuously monitor risks. The goal of the risk management process is to reduce threats to an organization's capital and earnings through a systematic, scientific approach.
Julia Graham
Technical Director and Deputy CEO, Airmic
Immediate Past President and Board Member, FERMA
The Fourth Revolution Managing risk in a changing worldAre you a tenant or an owner?
5th April 2016
Moscow
This document discusses incorporating risk management into business continuity planning (BCP). It defines risk and different types of risk including hazard, financial, operational, and strategic risk. It explains that risk management aims to increase success and reduce failure, while business continuity management provides resilience and response capabilities. Key aspects of risk management and business continuity management are compared. Trends in risk management are discussed like more "emergent problems" and the need for comprehensive governance models. The implications for practitioners emphasize adopting risk management as a normal business strategy and gradually increasing testing complexity.
The Role of Risk Appetite in embedding the ORSA and linking with Business Str...Susan Young
The document discusses embedding an organization's Own Risk and Solvency Assessment (ORSA) and linking it to business strategy and risk appetite. It covers defining risk limits, articulating risk appetite statements, embedding risk appetite throughout the organization, and linking risk appetite to the ORSA process. The ORSA helps ensure risk appetite remains aligned with business plans and strategies and is a key component of an effective risk management system.
This document discusses the concept of risk from multiple perspectives. It begins by providing examples of risks faced around the world from food shortages to natural disasters. It then defines risk and discusses it in the context of business environments and change. The document outlines different types of risks including financial, operational, strategic and hazard risks. It provides examples of risks within each category. It also discusses risk analysis and management. In summary, the document presents an overview of what risk is, different sources and types of risk, and the importance of risk analysis for decision making.
UCI Exec. MBA & Forum for Corp. Directors July 2009 - Board Governance: E...prosenzw69
The document discusses a presentation on enterprise risk management (ERM). It covers defining ERM, drivers for ERM adoption, ERM roles and responsibilities, and a practical approach to implementing ERM. This includes conducting an enterprise risk assessment to identify key risks and a risk management framework assessment to evaluate risk processes. The goal is to embed risk management into decision making and business activities.
Risk Reimagined! Series- The Importance of People and Culture to Effective Ri...Resolver Inc.
Copyright notice: The following slides are intended for professional use within an organization for discussion purposes only. Any other uses or modifications are strictly prohibited.
Any organization is an assembly of people: people who take risk as they manage and direct the enterprise; people who decide how much risk is acceptable or even desirable; and provide oversight of the management of risk across the extended enterprise.
Organizational culture has been the topic of study for many years.
• “Culture is how organizations ‘do things’.” — Robbie Katanga
• “Organizational culture is the sum of values and rituals which serve as ‘glue’ to integrate the members of the organization.” — Richard Perrin
Richard Anderson and Norman Marks share their views on this complex subject. They cover:
• What is the difference between the “risk” culture and the “organizational” culture? How can it be analysed?
• Who takes risk, and who should be responsible for deciding how much risk to take?
• Is there such a thing as a single risk level?
• Why do so many of us take different views of exactly the same risks? How does an organization decide which view is “right”?
• Is one person’s risk another’s opportunity?
• What about when the actions of one impact the success of another?
The study investigates the impact of risk management on performance of insurance companies. The research was done in Nairobi, in particular AIG insurance company where most of the respondent’s work. AIG have made investments in personnel, processes and technology to help control business risk. Historically, these risk investments have focused primarily on financial controls and regulatory compliance. The objectives of this study were aimed at knowing the impact of risk management on performance of insurance companies. Random sampling was used to select fifty one respondents. The research instruments majorly used included a set of questionnaires; for the respondents. The data collected has been presented using descriptive techniques and especially frequency distribution tables, pie charts and bar graphs. The findings of the study reveal that on operational risk management the underlying causes of operational risk losses are not always initially observable. It can be difficult to uncover the exact chain of events that led to the occurrence of the loss. In addition, one cause might be linked to more than one event or one event may have multiple causes (eg cascading control failures), resulting in different types of losses that could be covered by different insurance policies. On governance risk management through training and related activities aimed at building aimed at building awareness of the importance of ERM, roles and responsibilities and value to be derived from ERM. These results point to appropriate focus on risk governance since relevant, on time information risk and responsibilities. Reduced enterprise IT support / budgets and increased ease of technology deployments has led to multiple “shadow IT” organizations within enterprises. Shadow groups tend to not follow established control procedures. On strategic risk management, boards are seeing rapid increases both in the speed with which risk events take place and the contagion with which they spread across different categories of risk. They are especially concerned about the escalating impact of ‘catastrophic’ risks, which can threaten an organisation’s very existence and even undermine entire industries.
This document provides guidance on developing and implementing a risk appetite framework. It discusses how establishing risk appetite is important for meeting corporate governance requirements and addressing stakeholder expectations. It also notes that while the concept of risk appetite is straightforward, effectively defining and applying it in practice presents challenges. The document aims to help organizations better manage risk and meet governance duties by offering practical advice to boards and executives on assessing their risk tolerance. It received input from various professional associations and risk consulting firms who endorse the guidance and see risk appetite as a key topic for ongoing discussion.
This document discusses commercial bank risk management based on interviews with various financial institutions. It finds that banks actively manage three types of risks: (1) risks that can be avoided through business practices, (2) risks that can be transferred to other parties, and (3) risks that must be managed internally. For risks in the third category, banks employ a four part risk management process involving (i) setting standards and reporting requirements, (ii) establishing position limits and rules, (iii) outlining investment guidelines and strategies, and (iv) implementing incentive-based compensation schemes. The document evaluates current industry practices and identifies areas for improvement in commercial bank risk management.
Since the onset of the global financial crisis in 2008, businesses around the world have faced a barrage of new risk-related challenges.
The macroeconomic environment of recent years, marked by the global financial crisis, fiscal uncertainty in the US and sovereign debt problems in Europe, has also helped to make companies more riskaverse, leading them to swap bold investment decisions for more cautious behaviour and cash hoarding. The tide is turning, however, with most expecting 2014 to mark a return to growth...
This document discusses enterprise risk management (ERM) frameworks at two companies - Infosys and Rolls Royce. It finds that both companies manage risks through a mixture of internal management techniques and standard risk management processes. A risk managing culture is evident in both companies' management philosophies. The ERM programs at both include components like internal environment oversight, control activities, information/communication, and monitoring roles.
Abstract: Risk management is an activity which integrates recognition of risk, risk assessment, developing strategies to manage it, and mitigation of risk using managerial resources. Some traditional risk managements are focused on risks stemming from physical or legal causes (e.g. natural disasters or fires, accidents, death). Financial risk management, on the other hand, focuses on risks that can be managed using traded financial instruments. Objective of risk management is to reduce different risks related to a pre-selected domain to an acceptable. It may refer to numerous types of threats caused by environment, technology, humans, organizations and politics. The paper describes the different steps in the risk management process which methods are used in the different steps, and provides some examples for risk and safety management.
This document summarizes the key concepts of enterprise risk management. It discusses how risk management aims to help organizations achieve their mission and avoid surprises by dealing with uncertainty. The risk management process involves identifying potential risks, evaluating and prioritizing them, selecting risk management techniques, and monitoring risks. The roles of the board, senior management, and risk management committee in the risk management process are also outlined.
Thoughts on Direction of Ops Risk Management -V4 0Amrut Joshi
The document discusses risk management and operational risk. It provides context on the tumultuous global economic environment of the last decade which brought focus to risk management. However, some question if current risk management practices are adequate given failures still occurred. The document then discusses various studies on risk management and findings that risks are about human decisions. Therefore, influencing business decisions is important to manage risks and avoid failures. It introduces the concept of "behavioural risk management" and capturing the experience of being embedded within business to influence decisions from the first line of defence.
A structured approach to Enterprise Risk Management (ERM) and the requirement...Hassan Zaitoun
This document provides a structured approach to implementing enterprise risk management (ERM) based on ISO 31000. It discusses key risk management principles, including defining risk, establishing a risk management process, and creating a risk-aware culture. The document advocates developing a risk architecture, strategy, and protocols to provide proper context for risk activities. It also summarizes ISO 31000's risk management process of risk identification, evaluation, response, resourcing, reaction planning, and reporting.
This document summarizes a presentation on leading risk culture change by Linda Conrad of Zurich, Paul Walker of St. John's University, and Johan Willaert of Agfa Corporate Center. It discusses establishing leadership support for enterprise risk management (ERM), defining the scope of risk initiatives, mapping strategic risks, conducting risk assessments, setting action plans, and periodically reviewing risk management processes. The presentation emphasizes aligning ERM with business strategy, quantifying risks, gaining senior management buy-in, and communicating with stakeholders to develop a proactive risk culture.
Enterprise Risk Management and SustainabilityJeff B
An overview of our endeavors at implementing ISO 31000 enterprise risk management and the importance of establishing good risk culture within the company.
Dtt Fsi Global Risk Management Survey Fifth Editionbartonp
The document is a summary of findings from Deloitte's fifth global risk management survey of 130 financial institutions with nearly $21 trillion in total assets. Key findings include:
1) Risk management oversight has risen to the board level at 70% of institutions compared to 59% in 2004.
2) 84% of institutions now have a Chief Risk Officer compared to 65% in 2002.
3) Institutions rate themselves most effective at managing traditional risks like market, credit, and liquidity, and less effective at newer risks like operational and geopolitical risks.
4) Only 35% of institutions have fully implemented enterprise-wide risk management programs.
The document compares three major risk management frameworks: NIST, ISO, and COSO. NIST focuses on information security and risk management for US federal systems. ISO provides generic international guidelines for diverse organizations. COSO emphasizes internal controls and accurate reporting. While the frameworks differ in scope and focus, they all aim to guide organizations in managing risks through integrated strategies. Organizations should analyze features of each to determine the best combination for their unique needs and objectives.
Sharing Practice on Enterprise Risk Management (ERM)Diane Christina
The document discusses enterprise risk management (ERM). It provides an example ERM universe that includes strategic risks, physical assets risks, human factors risks, and financial risks. It also discusses some key aspects of effective ERM implementation, including establishing a risk governance framework, developing a risk management infrastructure, and following a risk management process of identifying, assessing, managing, and monitoring risks. The document is intended to share practices on ERM.
The document discusses the risk management process, which consists of 5 steps: 1) identifying risks, 2) analyzing risks, 3) prioritizing risks, 4) treating risks, and 5) monitoring risks. It provides details on each step, such as how to identify potential risks, analyze their scope and severity, rank their priority, implement solutions to address risks, and continuously monitor risks. The goal of the risk management process is to reduce threats to an organization's capital and earnings through a systematic, scientific approach.
Julia Graham
Technical Director and Deputy CEO, Airmic
Immediate Past President and Board Member, FERMA
The Fourth Revolution Managing risk in a changing worldAre you a tenant or an owner?
5th April 2016
Moscow
This document discusses incorporating risk management into business continuity planning (BCP). It defines risk and different types of risk including hazard, financial, operational, and strategic risk. It explains that risk management aims to increase success and reduce failure, while business continuity management provides resilience and response capabilities. Key aspects of risk management and business continuity management are compared. Trends in risk management are discussed like more "emergent problems" and the need for comprehensive governance models. The implications for practitioners emphasize adopting risk management as a normal business strategy and gradually increasing testing complexity.
The Role of Risk Appetite in embedding the ORSA and linking with Business Str...Susan Young
The document discusses embedding an organization's Own Risk and Solvency Assessment (ORSA) and linking it to business strategy and risk appetite. It covers defining risk limits, articulating risk appetite statements, embedding risk appetite throughout the organization, and linking risk appetite to the ORSA process. The ORSA helps ensure risk appetite remains aligned with business plans and strategies and is a key component of an effective risk management system.
This document discusses the concept of risk from multiple perspectives. It begins by providing examples of risks faced around the world from food shortages to natural disasters. It then defines risk and discusses it in the context of business environments and change. The document outlines different types of risks including financial, operational, strategic and hazard risks. It provides examples of risks within each category. It also discusses risk analysis and management. In summary, the document presents an overview of what risk is, different sources and types of risk, and the importance of risk analysis for decision making.
UCI Exec. MBA & Forum for Corp. Directors July 2009 - Board Governance: E...prosenzw69
The document discusses a presentation on enterprise risk management (ERM). It covers defining ERM, drivers for ERM adoption, ERM roles and responsibilities, and a practical approach to implementing ERM. This includes conducting an enterprise risk assessment to identify key risks and a risk management framework assessment to evaluate risk processes. The goal is to embed risk management into decision making and business activities.
Risk Reimagined! Series- The Importance of People and Culture to Effective Ri...Resolver Inc.
Copyright notice: The following slides are intended for professional use within an organization for discussion purposes only. Any other uses or modifications are strictly prohibited.
Any organization is an assembly of people: people who take risk as they manage and direct the enterprise; people who decide how much risk is acceptable or even desirable; and provide oversight of the management of risk across the extended enterprise.
Organizational culture has been the topic of study for many years.
• “Culture is how organizations ‘do things’.” — Robbie Katanga
• “Organizational culture is the sum of values and rituals which serve as ‘glue’ to integrate the members of the organization.” — Richard Perrin
Richard Anderson and Norman Marks share their views on this complex subject. They cover:
• What is the difference between the “risk” culture and the “organizational” culture? How can it be analysed?
• Who takes risk, and who should be responsible for deciding how much risk to take?
• Is there such a thing as a single risk level?
• Why do so many of us take different views of exactly the same risks? How does an organization decide which view is “right”?
• Is one person’s risk another’s opportunity?
• What about when the actions of one impact the success of another?
The study investigates the impact of risk management on performance of insurance companies. The research was done in Nairobi, in particular AIG insurance company where most of the respondent’s work. AIG have made investments in personnel, processes and technology to help control business risk. Historically, these risk investments have focused primarily on financial controls and regulatory compliance. The objectives of this study were aimed at knowing the impact of risk management on performance of insurance companies. Random sampling was used to select fifty one respondents. The research instruments majorly used included a set of questionnaires; for the respondents. The data collected has been presented using descriptive techniques and especially frequency distribution tables, pie charts and bar graphs. The findings of the study reveal that on operational risk management the underlying causes of operational risk losses are not always initially observable. It can be difficult to uncover the exact chain of events that led to the occurrence of the loss. In addition, one cause might be linked to more than one event or one event may have multiple causes (eg cascading control failures), resulting in different types of losses that could be covered by different insurance policies. On governance risk management through training and related activities aimed at building aimed at building awareness of the importance of ERM, roles and responsibilities and value to be derived from ERM. These results point to appropriate focus on risk governance since relevant, on time information risk and responsibilities. Reduced enterprise IT support / budgets and increased ease of technology deployments has led to multiple “shadow IT” organizations within enterprises. Shadow groups tend to not follow established control procedures. On strategic risk management, boards are seeing rapid increases both in the speed with which risk events take place and the contagion with which they spread across different categories of risk. They are especially concerned about the escalating impact of ‘catastrophic’ risks, which can threaten an organisation’s very existence and even undermine entire industries.
This document provides guidance on developing and implementing a risk appetite framework. It discusses how establishing risk appetite is important for meeting corporate governance requirements and addressing stakeholder expectations. It also notes that while the concept of risk appetite is straightforward, effectively defining and applying it in practice presents challenges. The document aims to help organizations better manage risk and meet governance duties by offering practical advice to boards and executives on assessing their risk tolerance. It received input from various professional associations and risk consulting firms who endorse the guidance and see risk appetite as a key topic for ongoing discussion.
This document discusses commercial bank risk management based on interviews with various financial institutions. It finds that banks actively manage three types of risks: (1) risks that can be avoided through business practices, (2) risks that can be transferred to other parties, and (3) risks that must be managed internally. For risks in the third category, banks employ a four part risk management process involving (i) setting standards and reporting requirements, (ii) establishing position limits and rules, (iii) outlining investment guidelines and strategies, and (iv) implementing incentive-based compensation schemes. The document evaluates current industry practices and identifies areas for improvement in commercial bank risk management.
Since the onset of the global financial crisis in 2008, businesses around the world have faced a barrage of new risk-related challenges.
The macroeconomic environment of recent years, marked by the global financial crisis, fiscal uncertainty in the US and sovereign debt problems in Europe, has also helped to make companies more riskaverse, leading them to swap bold investment decisions for more cautious behaviour and cash hoarding. The tide is turning, however, with most expecting 2014 to mark a return to growth...
This document is a term paper submitted by Anu Damodaran to her faculty guide, Mr. C.T. Sunil, in partial completion of her MBA program at Amity University in Dubai. The paper is titled "To study ERM - A competitive edge for the company and how it adds value to its shareholders". The introduction provides background on enterprise risk management (ERM) and its importance for businesses facing various strategic, market, operational and financial risks. The paper will review literature on ERM and explore how companies can implement ERM through risk mapping and maturity models. It will also discuss the advantages, suitability and limitations of ERM for businesses.
Risk management practices among commercial banks in ghanaAlexander Decker
This document discusses risk management practices among commercial banks in Ghana. It begins with an abstract that summarizes the study, which compares risk management practices across commercial banks using a regression model. The study found that banks are somewhat efficient in managing risk, and risk monitoring and control is the most influential factor. The document then provides background on the banking system in Ghana and the importance of risk management. It discusses theoretical models and approaches to risk management, highlighting understanding risk, risk identification, risk assessment, analysis, and monitoring. The empirical literature review found that few studies have examined risk management practices in financial institutions specifically.
Effect of Enterprise Risk Management on Sustainable Financial Performance of ...AJSERJournal
The paper is aimed at determining the effect of Enterprise Risk Management (ERM) on Sustainable
financial performance of deposit money banks in Nigeria. The specific objectives of the research is to determine the
effect of ERM on earning per share (EPS) and to ascertain the effect of ERM on Tobin Q. Descriptive research design
was adopted for the study considering the total population of all the twenty-one listed deposit money banks in Nigeria.
Data were gathered via secondary source from five (5) public annual reports of the listed deposit money banks for a
period of six years ranged from 2013-2018 and analysed using percentages and ratios. Multiple regressions was
employed in data analysis and testing the hypotheses; in determining if there is a significant effect of Enterprise Risk
Management on Earnings per Share and Tobin Q of listed deposit money banks in Nigeria. The study revealed that
there is a positive and significant relationship between ERM (Firms Size, Leverage) and sustainable financial
performance (TQ & EPS) of listed deposit money banks in Nigeria. Based on the findings, the study recommends that
financial institutions in Nigeria should employ robust Enterprise Risk Management Practices as these are likely to
greatly influence their financial performance in one way or the other and that Central Bank of Nigeria and other
regulators should endeavour to strengthen the enforcement of risk control mechanism to boost a robust bank
performance.
This document provides an introduction and overview of the book "Risk Taking: A Corporate Governance Perspective". It was created based on workshops conducted by the authors for over 1,000 corporate directors and managers in developing countries from 2010-2012. The workshops and book aim to enhance boards' capabilities for overseeing risk management. It discusses how risk taking is an essential but uncertain part of business that boards must effectively govern. It then previews the contents and target audience of directors for the various sections covering topics like defining risk, measuring risk-adjusted value, tools for risk decision making, and building a strategic risk-taking organization.
This document discusses differences between risk management in corporations versus financial institutions. While financial institutions led the development of modern risk management practices, their risks focus on financial and market risks and are not directly transferable to corporations. Corporations face a wider variety of risks related to their operations. The nature of risks in corporations requires customized risk management practices rather than directly applying financial institution frameworks. Overall, corporations can benefit from certain financial institution practices but need to adapt them to their own business contexts and risk environments.
Risk Governance Conference - Board Governance and Emerging Risks in the 21st ...FERMA
On 10 July 2015, a collaboration between ecoDa, FERMA and AIG, brought together directors, risk managers and insurers from across Europe to share perspectives on the quality of the Risk conversation at Board level and to generate ideas for improving it.
What are the key components of holistic risk management? This report, sponsored by SAP, investigates the organisational measures companies must take to address the totality of the risks they face. Read more>> http://bit.ly/1LsYvUx
This document discusses risk management strategies. It begins by defining risk and its importance in projects and organizations. It then discusses different risk management strategies used by healthcare companies to control costs and ensure sustainability. It also discusses using a risk matrix to help assess and estimate different risk levels and the appropriate handling strategies. Finally, it discusses identifying risks in the critical path of a project as the first step in the risk management process in order to determine what specific risks may affect the project and help mitigate delays.
This document discusses best practices for enterprise risk management (ERM) from the perspective of a board of directors. It addresses five key dimensions of ERM: risk transparency and insight, risk appetite and strategy, risk-related processes and decisions, risk organization and governance, and risk culture. The document provides recommendations for boards to strengthen their company's risk management, including developing a prioritized risk heat map, understanding the company's "big bets," ensuring risk reports deliver clear and insightful information, defining the company's risk appetite, integrating risk insights into strategy, and focusing on building a strong risk culture. The document concludes by outlining 12 specific actions boards should take to lift their company to the highest standards of risk management.
The document discusses the role of chartered accountants in enterprise risk management. It begins with defining risk and the types of risks faced by organizations. It then explains what enterprise risk management is, its importance and benefits. It outlines the statutory requirements for ERM in India per the Companies Act and SEBI regulations. Finally, it details the various ways chartered accountants can facilitate the ERM process, such as conducting process audits, developing ERM frameworks, and assisting with implementation.
Role of Actuaries in Enterprise Risk Management Sonjai_Rajiv(17 GCA) Final CopySonjai Kumar, SIRM
Actuaries have traditionally been involved in risk identification and measurement in insurance, particularly for mortality, lapse, expense, and interest rate risk. However, the role of actuaries is expanding to enterprise risk management (ERM) in insurance and other financial sectors like banking. Actuaries' quantitative skills make them well-suited for ERM tasks like calculating economic capital, value at risk, and stress testing across various risk types. The Solvency II regulations also provide opportunities for actuaries to be involved in all three pillars of the solvency framework. For actuaries to take on broader ERM roles, they need to enhance their skills in areas like credit, liquidity, and operational risk management.
Manigent Aligning Risk Appetite And ExposureAndrew Smart
This document discusses aligning an organization's risk appetite and risk exposure through strategic execution. It argues that successful strategy execution in the post-credit crisis world requires balancing risk appetite and exposure within the context of clear strategic objectives. The document provides a roadmap for organizations to determine strategic objectives, define risk appetite, identify key risks, review risk appetite in light of key risks, conduct risk assessments, and map risk exposure to risk appetite using a risk appetite and exposure matrix. Following this process allows organizations to integrate risk management into strategic decision making.
Common Risk Management failures include lack of organizational integration, outdated risk measurement capabilities, and failure to view risk management as an enabler of long-term competitive advantage rather than just a preventative measure. Major challenges in establishing effective ERM include organizational silos, growing and changing risks, and cost pressures. As risk management becomes more strategic, companies are expected to increase spending to improve risk capabilities across the organization.
FERMA European Risk Management Benchmarking Survey 2012 – BrochureFERMA
This document summarizes the key findings of the 6th edition of the FERMA Risk Management Benchmarking Survey from 2012. Some of the main findings include:
1. Business compliance and legal requirements remain the main external factors triggering risk management, but shareholder requirements are now the second most important.
2. The impacts of the EU 8th Company Law Directive are still poorly understood and integrated by many companies.
3. There is a correlation found between higher levels of risk management maturity and better company performance in terms of profitability and growth.
4. Market competition and business/regulatory risks remain the top risk priorities according to the survey.
Paradigm Paralysis in ERM & IA EB7_p48-51 Tim Leech v2Tim Leech
The document discusses the need for a paradigm shift in enterprise risk management (ERM) and internal audit approaches from a risk-centric model to an objective-centric model. It argues the current risk-centric models that rely on risk registers are flawed because they look at risks in isolation rather than linking them to organizational objectives. It proposes boards require management to regularly report on residual risk status linked to key value creation and preservation objectives. This would position management as primarily responsible for risk assessment rather than traditional ERM and internal audit groups. It acknowledges there are significant barriers to change, including guidance materials, skills gaps, and reluctance to change entrenched practices.
Yvonne I Pytlik Journal Of Securities Law, Regulation & Compliance April ...ypytlik
April 2010 - Journal of Securities Law, Regulation & Compliance Volume 3 Number 2
Compliance risk: A critical business risk
for asset managers
ABSTRACT
2010 presents a historical moment to define the
path forward to the ‘future of enterprise risk
management and mitigation strategies’ of
increasing compliance risk for asset managers.1–4
The recent financial crises and cases of material
compliance violations, Ponzi schemes, fraudulent
activities, misappropriation of investors’ assets
and collapse of major financial firms have had
significant, harmful impact on investors and
shareholders. Serious compliance violations, such
as insider trading, have proven to be self-destructive
to asset managers. No one is immune to
these trends. ‘Enterprise Risk Management —
2010 and Beyond Forward Looking Approach
by Asset Managers’ is a series of papers dedicated
to regulatory developments and industry best practices in the enterprise risk management
with a focus on ‘compliance risk: a critical business
risk for asset managers’.
This risk management essay discusses key risks that construction project managers must consider. It notes that risk is present at all stages of a project's life cycle and must be jointly managed. Poor risk mitigation can negatively impact a project's performance, so proper risk management processes are essential. Specific risks addressed include cost overruns, delays, quality issues, regulatory changes, interest rate fluctuations, and exchange rate volatility for international projects. The essay emphasizes the importance of identifying and mitigating risks to help ensure construction projects are successful.
CHAPTER 34Turning Crisis into OpportunityBuilding an ERM.docxketurahhazelhurst
CHAPTER 34
Turning Crisis into Opportunity
Building an ERM Program at General Motors
MARC S. ROBINSON
Assistant Director, Enterprise Risk Management, GM
LISA M. SMITH
Assistant Director, Enterprise Risk Management, GM
BRIAN D. THELEN
General Auditor, GM
This case study chronicles the ground-up implementation of enterprise riskmanagement (ERM) at General Motors Company (GM), starting in 2010through the first four years of implementation. Discussion topics include
lessons learned during implementation and some of the unique approaches, tools,
and techniques that GM has employed. Examples of senior management reporting
are also included.
I think risk management is an element of all good executive management teams
and boards. It will ensure viability in downturns and high-risk periods. I think if
that is done not only within the automotive industry, but on a global and specif-
ically on a national scale, economies will be in better shape because it is additive.
If everybody is doing their job in assessing and understanding risk, the ultimate
outcome will be much more positive for our national economy and society, and it
is incumbent that corporate leadership understands that responsibility.
—Daniel F. Akerson, Chairman and Chief Executive Officer,
General Motors, October 2012
BACKGROUND AND IMPLEMENTATION
The enterprise risk management (ERM) program at General Motors was founded
in late 2010 at the direction of GM’s then newly appointed chief executive officer
(CEO), Daniel F. Akerson, who sought to leverage the program as another means to
achieve a competitive advantage in the industry. Having gone through bankruptcy
in 2009 as a new board member, Akerson felt that a more robust risk management
program would help guide the organization around the drivers of killer risks1
going forward. His goal was to help the company ensure that it was prepared,
607
www.it-ebooks.info
608 Implementing Enterprise Risk Management
agile, and fast to respond in an ever-changing world. Perhaps most importantly,
Akerson wanted an ERM program that would focus not only on risks but on oppor-
tunities as well.
A chief risk officer (CRO) was selected and appointed from within, and the
Finance and Risk Policy Committee of the board of directors was chartered to over-
see risk management as well as financial strategies and policies. In support of the
program, a senior manager and director joined the team. Risk officers were also
identified and aligned to all direct reports of the CEO; this helped to ensure that
all aspects of the business were covered. The CEO is the ultimate chief risk officer,
and his direct reports are the ultimate risk owners. Members of the risk officer team
were carefully selected by senior leadership based on their strong business expe-
rience, financial acumen, and most of all their ability to lead in the identification
and discussion of risk in an objective and transparent manner. These representa-
tives were expected to actively p ...
CHAPTER 34Turning Crisis into OpportunityBuilding an ERM.docx
Sap 2009 06 02 Risk Management
1. Managing risk in perilous times
Practical steps to accelerate recovery
A report from the Economist Intelligence Unit
Sponsored by ACE, KPMG, SAP and Towers Perrin
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