1. Page 1 Recording of this session via any media type is strictly prohibited. Page 1 ERM IN A CULTURE OF INNOVATION Laura Langone Sr. Director, Global Risk Management Juniper Networks, Inc.

2. Page 2 Recording of this session via any media type is strictly prohibited. Housekeeping Information  Keep this page to insert information.  _____________

3. Page 3 Recording of this session via any media type is strictly prohibited. What to Expect  Consider alternate development and implementation approaches to your ERM program  Assemble techniques for managing risk in a complex and decentralized environment  Get tips on creating your own risk appetite statement and key risk indicators tied to performance

4. Page 4 Recording of this session via any media type is strictly prohibited. Innovation Defined, Wikipedia A Culture of Innovation  An application of better solutions  Meeting unarticulated needs  Can be either more effective products, processes, services, technologies, or ideas  Disruptive Technology – is something original and, as consequence, new that "breaks into" the market or society and obtains a foothold in a market. Typically, growth companies are innovators. Start-ups willing to take more risk. But as companies mature, margins and revenue are of greater concern and while maybe not defined a company’s risk appetite changes. Innovation Life Cycle, Wikipedia

5. Page 5 Recording of this session via any media type is strictly prohibited. Successful Innovation Execution Harvard Business Review, May 2012 Managing Your Innovation Portfolio Managing Innovation Successfully Diversity your innovation portfolio by balancing the mix of innovation across three levels of innovation ambitions: 1. Core Innovation Ambitions – These include initiatives that are incremental and enhancements to core offerings, such as new additions to existing products or services that utilizes assets the company already has in place (i.e. a small risk undertaking). 2. Adjacent Innovation Ambitions– These expand the existing business by leveraging what the business already does well (part core initiative) into adjacent new spaces or uses. 3. Transformational Innovation Ambitions – These initiatives represent those viewed as breakthroughs or creations of entirely new offerings, businesses, or markets (i.e. a very high level of risk to manage). And evaluating the risks to failing to do so effectively and/or manage key risks impacting innovation.

6. Page 6 Recording of this session via any media type is strictly prohibited. Identify Risks to Innovation Execution Harvard Business Review, May 2012 Managing Your Innovation PortfolioRisk to Innovation  Failure to diversity your innovation portfolio by balancing the mix of innovation across three levels of innovation ambition  Disruptive Technology – Someone else has disruptive tech that negatively impacts your company products and market share sooner than anticipated.  Failure to transition products timely and successfully (i.e., GTM strategy, infrastructure to support product sales and acceptance)  Failure to optimize full product suite to existing or other customers.  Other risks: Industry consolidation, lack of clear strategy, industry risks, external events.

7. Page 7 Recording of this session via any media type is strictly prohibited. Utilizing ERM in Growth Companies  ERM frameworks still apply  Prioritization of elements to focus may differ  Risk Appetite may be greater than other areas  Product life-cycles shorter  Decision making more nimble ERM should be adapted to meet your culture, current risk appetite, and decision making environment to be sustainable and relevant

8. Page 8 Recording of this session via any media type is strictly prohibited. ERM Components = Execution on Innovation Risk Mitigation, Monitoring & Reporting Risk Assessment Risk Appetite Adopt framework including standard components: 1.Risk Governance 2.Risk Appetite/Tolerance 3.Risk Assessment 4.Risk Mitigation & Ownership 5.Monitoring & Reporting 6.Assurance Process -

9. Page 9 Recording of this session via any media type is strictly prohibited. Focus on Strategic Risks Execution on Innovation Pipeline is critical  This doesn’t mean a standard approach to ERM is not relevant. RIMS Strategic Risk Assessment Model

10. Page 10 Recording of this session via any media type is strictly prohibited. Helping Our Customers Build The Best Networks for Their Business 2013 Revenue: $4.67 Billion Global Presence: 123 Offices In 47 Countries 9,600+ Employees Doing Business With 99 Of Fortune Global 100 and Top 100 Service Providers Powering 7 Of The World’s 8 Largest Stock Exchanges Juniper Networks delivers innovative network solutions and builds partnerships that support our customers' growth ….

11. Page 11 Recording of this session via any media type is strictly prohibited. Risk Infrastructure Building a sustainable risk management infrastructure across the enterprise is a multi-prong approach: 1)Establish oversight for risk at the appropriate levels of management 2)Develop a consistent process for evaluating, mitigating and reporting on critical risks. 3)Ensure accountability to Risk Owners to mitigate risks and report progress on activities and provide directional support as needed Risk Infrastructure Risk Ownership Develop risk governance model Identify Risks from defined risk register Develop risk universe Define risk prioritization criteria Assess and prioritize risks Identify risk owners Identify drivers & mitigation Integrate with corporate processes Develop risk monitoring/reporting Integrated Risk Management Approach Risk Governance

12. Page 12 Recording of this session via any media type is strictly prohibited. Risk Governance and Ownership Board of Directors – Oversight for key risks and governance Audit Committee – Evaluates risk management process EC – manages the program and mitigates the risks Risk Management Committee (EC Level) & RMWT (VP Level) Strategic Risks Operational Risks Compliance & SOX Financial Risks Compliance Risks Risk Management Working Team (VP Level) Supply Chain Risk Management Quality Council Sales Risk Management (TBD) IT Risk and Compliance Risk Culture is improving! Business Units & Functional Areas are taking more accountability for risk management. This took time to change the culture. Top Down Directive to identify and evaluate our top strategic and operational risks impacting our ability to achieve our business objectives. Juniper Confidential Restricted Distribution

13. Page 13 Recording of this session via any media type is strictly prohibited. Appetite for Risk Return Risk How much risk are you willing to take in pursuit of your business and strategic objectives? What risks could erode those returns and what can you tolerate on an individual risk basis? Tips Establish boundary statement R&D Spend Correlates Appetite Focus on tolerance levels impact ability to allocate more into product development

14. Page 14 Recording of this session via any media type is strictly prohibited. Measure Risk & Return Key Risk MetricsKey Performance Indicators A predictive measure or early warning signal that detects changes in risk exposure Link between strategy, execution, and performance management A measure to monitor the progress of risk mitigation activities (status and effectiveness) Typically provide a periodic assessment of historical business performance, but can also provide leading indicators of future performance. Measure the specific risks related to strategy or executionConnecting ideas, disciplines, people, realms KRIs are measured against thresholds that trigger escalation and further action; KPIs are measured against base and target levels Adapted from Source: ©Teacher & Educational Development, University of New Mexico School of Medicine, 2005

15. Page 15 Recording of this session via any media type is strictly prohibited. Strategy Map ThemeBalanced Scorecard Top Risks Objectives MeasuresTargets (KPI)MeasuresTarget KRI Qtr Trend Build the Best products Insert Specific Measures of the objective Insert Specific numerical target for improvement in the measurement Take market share ….. Insert Specific Measures of the objective Insert Specific numerical target for improvement in the measurement Disruptive Technologies Insert Specific Measures of the objective Insert Specific numerical target for improvement in the measurement Intellectual Property Insert Specific Measures of the objective Insert Specific numerical target for improvement in the measurement Monitor, mitigate, transfer, or exploit risk -What are the 2-3 best things that can happen if we exploit the risk? -What can we do to increase the possibility of this favorable impact to happen? -What are the 2-3 worst things that can happen if we don’t control the risk? -What will we do to reduce the unfavorable impact of these things happening? Reporting on Key Risks

16. Page 16 Recording of this session via any media type is strictly prohibited. Laura Langone Senior Director Global Risk Management Juniper Networks, Inc. langone@juniper.net Laura is Senior Director of Global Risk Management at Juniper Networks, the industry leader in network innovation. She is responsible for Juniper’s Enterprise Risk Management (ERM) program and global risk management. Prior to Juniper, Laura worked with several Bay Area companies in Treasury, Risk Management and Legal roles including Genentech and Oracle. She worked in insurance defense for Gordon & Rees, LLP. Laura started her career in casualty underwriting with AIG working the U.S. and abroad servicing large accounts. Laura is acting president of Silicon Valley Risk & Insurance Society (SVRIMS) Chapter,. She received her Juris Doctorate from Golden Gate University School of Law and a Masters in International Management from Thunderbird School of Global Management.