Overcome ERM implementation challenges by taking cues from leading global organizations
Implementing Enterprise Risk Management is a practical guide to establishing an effective ERM system by applying best practices at a granular level. Case studies of leading organizations including Mars, Statoil, LEGO, British Columbia Lottery Corporation, and Astro illustrate the real-world implementation of ERM on a macro level, while also addressing how ERM informs the response to specific incidents. Readers will learn how top companies are effectively constructing ERM systems to positively drive financial growth and manage operational and outside risk factors. By addressing the challenges of adopting ERM in large organizations with different functioning silos and well-established processes, this guide provides expert insight into fitting the new framework into cultures resistant to change.
Enterprise risk management covers accidental losses as well as financial, strategic, operational, and other risks. Recent economic and financial market volatility has fueled a heightened interest in ERM, and regulators and investors have begun to scrutinize companies’ risk-management policies and procedures. Implementing Enterprise Risk Management provides clear, demonstrative instruction on establishing a strong, effective system. Readers will learn to:
- Put the right people in the right places to build a strong ERM framework
- Establish an ERM system in the face of cultural, logistical, and historical challenges
- Create a common language and reporting system for communicating key risk indicators
- Create a risk-aware culture without discouraging beneficial risk-taking behaviors
ERM is a complex endeavor, requiring expert planning, organization, and leadership, with the goal of steering a company’s activities in a direction that minimizes the effects of risk on financial value and performance. Corporate boards are increasingly required to review and report on the adequacy of ERM in the organizations they administer, and Implementing Enterprise Risk Management offers operative guidance for creating a program that will pass muster.
Table of Content
Foreword xiii
1 Enterprise Risk Management Case Studies: An Introduction and Overview 1
John R.S. Fraser, Betty J. Simkins, and Kristina Narvaez
Part I Overview and Insights for Teaching ERM 17
2 An Innovative Method to Teaching Enterprise Risk Management: A Learner-Centered Teaching Approach 19
David R. Lange and Betty J. Simkins
Part II ERM Implementation at Leading Organizations 37
3 ERM at Mars, Incorporated: ERM for Strategy and Operations 39
Larry Warner
4 Value and Risk: Enterprise Risk Management at Statoil 59
Alf Alviniussen and Håkan Jankensgård
5 ERM in Practice at the University of California Health System 75
Grace Crickette
6 Strategic Risk Management at the LEGO Group: Integrating Strategy and Risk Management 93
Mark L. Frigo and Hans Læssøe
7 Turning the Organizational Pyramid Upside Down: Ten Years of Evolution in Enterprise Risk Management at United Grain Growers 107
John Bugalla
8 Housing Association Case Study of ERM in a Changing Marketplace 119
John Hargreaves
9 Lessons from the Academy: ERM Implementation in the University Setting 143
Anne E. Lundquist
10 Developing Accountability in Risk Management: The British Columbia Lottery Corporation Case Study 179
Jacquetta C. M. Goy
11 Starting from Scratch: The Evolution of ERM at the Workers’ Compensation Fund 207
Dan M. Hair
12 Measuring Performance at Intuit: A Value-Added Component in ERM Programs 227
Janet Nasburg
13 TD Bank’s Approach to an Enterprise Risk Management Program 241
Paul Cunha and Kristina Narvaez
Part III Linking ERM to Strategy and Strategic Risk Management 251
14 A Strategic Approach to Enterprise Risk Management at Zurich Insurance Group 253
Linda Conrad and Kristina Narvaez
15 Embedding ERM into Strategic Planning at the City of Edmonton 281
Ken Baker
16 Leveraging ERM to Practice Strategic Risk Management 305
John Bugalla and James Kallman
Part IV Specialized Aspects of Risk Management 319
17 Developing a Strategic Risk Plan for the Hope City Police Service 321
Andrew Graham
18 Blue Wood Chocolates 335
Stephen Mc Phie and Rick Nason
19 Kilgore Custom Milling 363
Rick Nason and Stephen Mc Phie
20 Implementing Risk Management within Middle Eastern Oil and Gas Companies 377
Alexander Larsen
21 The Role of Root Cause Analysis in Public Safety ERM Programs 397
Andrew Bent
22 JAA Inc.—A Case Study in Creating Value from Uncertainty: Best Practices in Managing Risk 427
Julian du Plessis, Arnold Schanfield, and Alpaslan Menevse
23 Control Complacency: Rogue Trading at Société Générale 461
Steve Lindo
24 The Role of Va R in Enterprise Risk Management: Calculating Value at Risk for Portfolios Held by the Vane Mallory Investment Bank 489
Allissa A. Lee and Betty J. Simkins
25 Uses of Efficient Frontier Analysis in Strategic Risk Management: A Technical Examination 501
Ward Ching and Loren Nickel
Part V Mini-Cases on ERM and Risk 523
26 Bim Consultants Inc. 525
John R.S. Fraser
27 Nerds Galore 529
Rob Quail
28 The Reluctant General Counsel 535
Norman D. Marks
29 Transforming Risk Management at Akawini Copper 539
Grant Purdy
30 Alleged Corruption at Chessfield: Corporate Governance and the Risk Oversight Role of the Board of Directors 547
Richard Leblanc
31 Operational Risk Management Case Study: Bon Boulangerie 555
Diana Del Bel Belluz
Part VI Other Case Studies 559
32 Constructive Dialogue and ERM: Lessons from the Financial Crisis 561
Thomas H. Stanton
33 Challenges and Obstacles of ERM Implementation in Poland 577
Zbigniew Krysiak and Stawomir Pijanowski
34 Turning Crisis into Opportunity: Building an ERM Program at General Motors 607
Marc S. Robinson, Lisa M. Smith, and Brian D. Thelen
35 ERM at Malaysia’s Media Company Astro: Quickly Implementing ERM and Using It to Assess the Risk-Adjusted Performance of a Portfolio of Acquired Foreign Companies 623
Patrick Adam K. Abdullah and Ghislain Giroux Dufort
About the Editors 649
Index 651
About the author
JOHN R.S. FRASER is the Senior Vice President of Internal Audit and former Chief Risk Officer of Hydro One Networks Inc. He holds several auditing and accounting certifications and has over 30 years of experience in the risk and control field.
BETTY J. SIMKINS is the Williams Chair and Professor of Finance at Oklahoma State University’s Spears School of Business, where she teaches enterprise risk management and other courses. She has published award-winning research on risk management in academic and professional outlets.
KRISTINA NARVAEZ is President and CEO of ERM Strategies. Her work in risk management has been recognized with accolades and awards from numerous organizations, including the Risk and Insurance Management Society.
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