1. How can an Enterprise Risk Management (ERM), programme enable organizations achieve strategic objectives more effectively? Dr P S Sahota  

2. Presentation structure
Global risk profile
Managing risk is a challenge
Managing risks: systems rather than silos
ERM: achieving organizational objectives
Concluding remarks

3. Global Risk Profile Adapted from Strenk lecture , Locton
Operational Risk
Contract Performance
Trademark Erosion
Customer Satisfaction
Financial Risk
Currency
Credit
Debt Covenants
Accrual Accuracy
HR Risk
Benefits
Key Management Loss
Stock Ownership Program
Succession Planning
Environment Risk
Terrorism
War
Political Stability
Regulatory- Local/ Nat’l
Public Relations
Natural environment
Technology Risk
Infrastructure Failure
Security
Consistent Strategy
Obsolescence
Strategic Risk
Competition
R&D Resource
Missed Market
Reputation
New Market Entrant
Major Customer (s) Loss
Supply chains
Adapted from Strenk lecture , Locton

4. Managing risk is clearly a challenge
Scope of Operations
Country 1
Country 2
Risk Source
Country 3
Country 4
Operational Risks
Financial Risks
Environmental Risks
Strategic Risk etc
Risk Financing
Risk Mitigation
Risk Qualification
Risk
Assessment
Risk Management Processes

5. Risk Management: systems rather than silos
A Silo Approach
An Enterprise Approach
Financial Risk
Financial Risk
Environment Risk
Environment Risk
Strategic Risk
Strategic Risk
Enterprise Risk
Management
Operation Risk
Operation Risk
HR Risk
HR Risk
Technology Risk
Technology Risk
Enterprise Risk Management: A rigorous approach to identifying, assessing and addressing risks from all sources that threaten the achievement of an organizations strategic, operational and financial objectives and/or represent an opportunity or competitive advantage.” Jerry Miccolis, Tillinghast-Towers Perrin

6. ERM: ACHIEVING STRATEGIC OBJECTIVES
What ERM is going to do
Risk culture is created throughout the enterprise
Risk strategy is linked to business strategy
Risk management becomes a continuous, systematic process integrated within the enterprise’s processes
How you can do it
Identify an internal “champion” of the ERM project. This “champion” needs to be a senior executive within the organization
Identify processes to manage serious threats to growth and return while identifying risks that represent opportunities
Understand appetite to risk
Establishes a robust, yet scalable, process for risk identification and assessment (AAR, CoP, CoI, learning by doing)

7. ERM: ACHIEVING STRATEGIC OBJECTIVES
How you can do it
Quantifying , aggregating and studying risk for interrelationships
Identifying who owns” those risks within the company “ and make everyone understand their role in managing risk
Establishing a framework and process that allows for a balancing of risk control activities within business processes
What ERM is going to do
The organization can anticipate, manage, optimize and monitor risk
Risk management responsibilities become clearly defined
Identify alternative methods
of organizing and managing exposures on a collective basis.

8. ERM: ACHIEVING STRATEGIC OBJECTIVES
What ERM is going to do
Risk becomes a key consideration for financial decision making
Improved intelligence for investment decisions.
Improve investors confidence (investors, scrutinize risk management policies/procedures)
How you can do it
Develop a framework to evaluate risk on a portfolio basis
Develop a robust ERM
methodology that can identify, assess and manage risks more cost-effectively
Develop “drill down” processes for putting information into the hands of senior management so they can focus the organization’s ability to achieve its strategic objectives.
Improve the quality of the management of enterprise-wide risk stewardship

9. ERM: ACHIEVING STRATEGIC OBJECTIVES (KPMG)
What ERM is going to do
Risk Governance
Risk Assessment
Risk Quantification and
Aggregation
Risk Monitoring and Reporting
Risk and Control Optimization
How you can do.
Put in place a risk management structure with clear accountabilities to support risk management objectives
Carry out frequent risk assessments in line with normal management reporting and including analysis
Carry out quantification of operational risk; advanced quantification of selected risks
Carry out extensive reporting to the board and audit committee on current risk levels and future risk issues
Put in place risk-adjusted performance, evaluation, and capital allocation strategies

10. Concluding Remarks
Effective ERM will improve the ability of organizations to learn and remain competitive within an uncertain environment. This will improve the performance of its brands and generate excellent returns from its business
The ability of organizations to “learn”, means that knowledge will utilised on problems and opportunities as they emerge and is generated through an ongoing evaluation of how these responses impact the organisation and its operating environment. This will assist in achieving its objective of putting its market scale and knowledge to good use
Organisational learning, as part of an effective ERM programme will play an important part in ensuring that new knowledge of current and potential risks continues to be replenished and updated to enable efficient responses to changes in its environment. This will strengthen the organisation

11. Concluding Remarks
ERM is not a project, but a process that develops within an organization, driven and supported by senior management
ERM becomes part of the operational culture of the organization with process owners and drivers, “enterprise-wide”
“Enterprise-wide” means “across the whole organization”, and includes the removal of traditional, functional, divisional, departmental, or cultural barriers
There is not an off-the-shelf ERM product that works for everyone. .