1. Operational Risk Management
Managing operational risks in an Industrial Environment
Jo Willaert- Corporate Risk Manager PRMIA - BELRIM 18 September 2014

2. Agfa Specialty Products
Organisation
Agfa-Gevaert Group
Parent Company
Corporate Centre
Agfa Specialty Products
Agfa Graphics
Agfa HealthCare

3. Agfa in the world Sales organisations in 40 countries
Representations in 100 countries
Manufacturing sites in 10 countries
Other
Prepress
No 1-2
HealthCare

4. Agfa Graphics: product portfolio
Software
Computer-to-Film
Film setter
Film
Analog Plates
Offset Press
Computer-to-Plate
Plate setter
Digital Plates
Thermal, Polymer & Silver
Proofing PC
Flexo Printing
Flexo Plates
Flexo Press
Flexo CTP
Screen Printing
Screen Press
Screen exposure frame
Screen
Digital Inkjet Print
Scanner
Industrial Inkjet Printing
Ink

5. Agfa HealthCare: product portfolio radiology
Processor
Conventional X-ray Film
Conventional
Radiography
X-ray Table
X-ray Film
PACS
Dry Film
Reusable
Phosphor plate
CR Digitizer
NX workstation
Dry Imager
Softcopy CR
DR-GenRad DR
CT MRI US NM
PET
Scanners
Hardcopy

6. Agfa HealthCare: digital workflow in radiology
CR & DR on Musica

7. Agfa HealthCare: IT solution portfolio
The HealthCare Community
Referring Physicians
Assisted Living
Home Care
Pharmacists
Payors
Electronic Patient Record
Administration
Resource Management
Logistics
Catering
Accounting
Billing
Planning
Examining
Diagnosing
Treating
Reporting
Emergency Room
Nursing
Intensive
Care
Surgery
Intensive Care
Laboratory
Cardiology
Radiology

8. Agfa Specialty Products: product portfolio
Classic Film
Functional Foils
Advanced Coatings and Chemicals

9. Enterprise Risk Management
Design of an ERM-Program in an Industrial Environment
Jo Willaert- Corporate Risk Manager PRMIA - BELRIM 18 September 2014

10. Design of an ERM-Program in an Industrial Environment
Why?
To reduce the volatility of the performance of the group
To safeguard business continuity
When?
Started in 2003
Not regulated, so flexibility in set up the ERM-program
Agfa’s ERM-Program design is not unique, is based on what was available in the literature at that time but is adapted to the culture and goals of the group.
It’s how Agfa did it, there are many other ways to organize ERM.

11. Design of an ERM-Program in an Industrial Environment
Mission Statement of the ERM-Process
ERM (Enterprise Risk Management) is the process whereby the risks related to the group’s activities are methodically assessed in order to avoid the negative consequences of the events that might push the company’s performance below expectations

12. Design of an ERM-Program in an Industrial Environment
Responsibilities
Group’s Management
Risk Owner
Risk Manager
Internal Auditor versus Risk Manager within the ERM-process

13. Design of an ERM-Program in an Industrial Environment
Responsibilities
Group’s Management defines and monitors risk policies in accordance with the company’s global strategy
Defining the company’s policy regarding Enterprise Risk Management
Defining internal audit planning by allocating audit resources in accordance with the risk management process
Defining the goals end objectives within Enterprise Risk Management
Monitoring the various ERM-programs
Setting of priorities in rolling out the risk management initiative

14. Design of an ERM-Program in an Industrial Environment
Responsibilities
Risk Owner
Person with the authority to manage the risk, to make the necessary decisions to keep the risk within the agreed boundaries.

15. Design of an ERM-Program in an Industrial Environment
Responsibilities
Risk Manager overviews the ERM-process
Overview of risk management activities in all risks
Support, guidance and best practice to the risk owners
Evaluation of adequacy of risk management methods used by the risk owners
Preparing/endorsing periodical risk management reporting
Ensuring adequate follow-up of the audit recommendations
Link between risk owners, Internal Audit and Management

16. Design of an ERM-Program in an Industrial Environment
Responsibilities
Internal Auditor versus Risk Manager within the ERM-process
Internal Auditor reviews that the internal contracts are operational and that they have the expected result
Risk Manager provides support and makes sure that all significant risks are identified and evaluated

17. Design of an ERM-Program in an Industrial Environment
What needs to be done?
Objective setting (objectives, indicators, opportunities, frame)
Inventory (Identification of every significant risk and its respective owner)
Determine the risk tolerance of the group
Determine the risk appetite of the board
Measure and prioritize each risk
Action plan
Systematic and Formal Control and Follow Up

18. Risk Evaluation (gross risk score)
Factor
Score
Description
 Probability 1 2 3 4 5
Extremely rare: only in extreme circumstances
Rare: every 10 – 25 years
Periodic: every couple of years
Recurrent: yearly
Occurs frequently: can occur more than once
Potential Severity
Less than € 10,000
€ 10,001-€ 100,000
€ 100,001-€1,000,000
€ 1,000,001-€ 10,000,000
Over €10,000,000
Time-to-Impact
Occurs over a long period of time providing opportunity to adjust or react
Occurs quickly, limited advance warning (days / weeks) 
Occurs suddenly - no advanced warning - no time to react

19. RISK MINIMIZING MEASURES times gross risk score = NET RISK SCORE
Adequacy Factor
Score
Description
Insurance 1
0,75
0,50
No insurance available
Partial insurance available
Fully insured
Preventive Measures
(before event)
No preventive measures available
Partially effective preventive measures available
Fully effective preventive measures available
Reductive Measures
(after event)
No reducing measures available
Partially effective reducing measures available
Fully effective reducing measures available
Audit Procedures
No audit procedures available
Partially effective audit procedures available
Fully effective audit procedures available

20. Design of an ERM-Program in an Industrial Environment
FINANCIAL RISKS
Financial market risks
Currency / foreign exchange fluctuations
Asset values
Credit default
Liquidity cash flow issues
STRATEGIC RISKS
Market demand
Customer / industry changes
Intellectual capital
Research & development
Image and reputation
M&A / Joint Ventures
Channels and networks .
OPERATIONAL RISKS
Information systems
Accounting / control system
Key managers
Regulatory environment
Supply chain
HAZARD RISKS
General / Public Liability
Property damage
Employee injury (WC, EB, EPL)
Natural disasters
Business interruption
7 - 8

21. Design of an ERM-Program in an Industrial Environment
Core roles: Internal Audit
Core Role: Risk Management
Core Roles: Line Management

22. Design of an ERM-Program in an Industrial Environment
Threats & Pitfalls
Too much, too fast, too much details
Accumulation of non-significant risks
Risk Owner’s limited knowledge of consequences of risks in other processes
Risk Ownership (= decision making) often confused with execution responsibility and/or hierarchical position.
Lack of communication / co-operation between different departments
Lack of support / commitment of senior management
Not equal part of yearly objectives/personal targets

23. Design of an ERM-Program in an Industrial Environment
Conclusion
No entrepreneurship without risks
Risks are opportunities, challenges versus threats, obstacles.
ERM is a methodology, Risk Management is an attitude, a mind-set
ERM should focus on:
Economical reality
Budget reality
Culture of the group
Credibility

24. Design of an ERM-Program in an Industrial Environment
Advice based on own experience
Before starting ERM-project:
be sure you have the full support of the board
be sure you know company’s culture
start with the very high risks only
communication is listening in the first place
patience is a virtue