Implementing Enterprise Risk Management

www.it-ebooks.info
www.it-ebooks.info
Additional Praise for
Implementing Enterprise Risk Management
Educators the world over seeking to make the management of risk an integral part
of management degrees have had great difficulties in providing their students with
a definitive ERM text for their course. The Standards and associated Handbooks
helped, but until the arrival of Implementing Enterprise Risk Management: Case Studies and Best Practices, there has been no text to enlighten students on the application
of an effective program to manage risk across an enterprise so that objectives are
maximized and threats minimized. Fraser, Simkins, and Narvaez have combined
with a group of contributors that represent the cream of risk practitioners, to provide the reader with a clear and concise journey through the management of risk
within a wide range of organizations and industries. The knowledge, skills, and
experience in the management of risk contained within the covers of this book are
second to none. It will provide a much needed resource to students and practitioners for many years to come and should become a well-used reference on the desk
of every manager of risk.
Kevin W. Knight AM, chairman, ISO/TC 262Risk Management
The authorsFraser, Simkins, and Narvaezhave done an invaluable service to
advance the science of enterprise risk management by collecting an extensive number of wonderful case studies that describe innovative risk management practices
in a diverse set of companies around the world. This book should be an extremely
valuable source of knowledge for anyone interested in the emerging and evolving
field of risk management.
Robert S. Kaplan, senior fellow, Marvin Bower Professor of Leadership
Development, emeritus, Harvard University
Lessons learned from case studies and best practices represent an efficient way
to gain practical insights on the implementation of ERM. Implementing Enterprise
Risk Management provides such insights from a robust collection of ERM programs across public companies and private organizations. I commend the editors
and contributors for making a significant contribution to ERM by sharing their
experiences.
James Lam, president, James Lam & Associates; director and Risk Oversight
Committee chairman, ETRADE Financial Corporation;
author, Enterprise Risk ManagementFrom Incentives to Controls
For those who still think that enterprise risk management is just a fad, the varied
examples of practical value-generating uses contained in this book should dispel
any doubt that the discipline is here to stay! The broad collection of practices is
insightful for students, academics, and executives, as well as seasoned risk management professionals.
Carol Fox, ARM, director of Strategic and Enterprise Risk Practice, RIMS
Managing risk across the enterprise is the new frontier of business management.
Doing so effectively, in my view, will be the single most important differentiating
factor for many enterprises in the twenty-first century. Implementing Enterprise Risk
Management: Case Studies and Best Practices is an innovative and important addition
to the literature and contains a wealth of insight in this critical area. This books
integration of theory with hands-on, real-world lessons in managing enterprise
risk provides an opportunity for its readers to gain insight and understanding that
could otherwise be acquired only through many years of hard-earned experience.
www.it-ebooks.info
I highly recommend this book for use by executives, line managers, risk managers,
and business students alike.
Douglas F. Prawitt, professor of Accounting at Brigham Young University,
and Committee of Sponsoring Organizations (COSO)
Executive Board member
The real beauty of and value in this book is its case study focus and the wide
variety of firms profiled and writers perspectives shared. This will provide readers
with a wealth of details and views that will help them chart an ERM journey of their
own that is more likely to fit the specific and typically customized ERM needs of
the firms for whom they toil.
Chris Mandel, senior vice president, Strategic Solutions for Sedgwick;
former president of the Risk Management Society
and the 2004 Risk Manager of the Year
Implementing Enterprise Risk Management looks at many industries through excellent case studies, providing a real-world base for its recommendations and an
important reminder that ERM is valuable in many industries. I highly recommend
this text.
Russell Walker, Clinical associate professor, Kellogg School of Management;
author of Winning with Risk Management
The body of knowledge in Implementing Enterprise Risk Management continues to
develop as business educators and leaders confront a complex and rapidly changing environment. This book provides a valuable resource for academics and practitioners in this dynamic area.
Mark L. Frigo, director, Strategic Risk Management Lab,
Kellstadt Graduate School of Business, DePaul University
The management of enterprise risk is one of the most vexatious problems confronting boards and executives worldwide. This is why this latest book by Fraser,
Simkins, and Narvaez is a much needed and highly refreshing approach to the subject. The editors have managed to assemble an impressive list of contributors who,
through a series of fascinating real-life case studies, adroitly help educate readers
to better understand and deal with the myriad of risks that can assault, seriously
maim, and/or kill an organization. This is a how to book written with the risk
management problem solver in mind. It provides the link that has been missing
for effectively teaching ERM at the university and executive education levels and
it is an exceptional achievement by true risk management advocates.
Dr. Chris Bart, FCPA, founder and lead faculty,
The Directors College of Canada
The Institute of Risk Management welcomes the publication of this highly practical text which should be of great interest to our students and members around the
world. Implementing Enterprise Risk Management brings together a fine collection of
detailed case studies from organizations of varying sizes and working in different sectors, all seeking to enhance their business performance by managing their
risks more effectively, from the boardroom to the shop floor. This book makes a
valuable contribution to the body of knowledge of what works that will benefit the
development of the risk profession.
Carolyn Williams, technical director, Institute of Risk Management
www.it-ebooks.info
IMPLEMENTING
ENTERPRISE RISK
MANAGEMENT
www.it-ebooks.info
The Robert W. Kolb Series in Finance provides a comprehensive view of the field
of finance in all of its variety and complexity. The series is projected to include
approximately 65 volumes covering all major topics and specializations in finance,
ranging from investments, to corporate finance, to financial institutions. Each volume in the Kolb Series in Finance consists of new articles especially written for
the volume.
Each volume is edited by a specialist in a particular area of finance, who develops
the volume outline and commissions articles by the worlds experts in that particular field of finance. Each volume includes an editors introduction and approximately thirty articles to fully describe the current state of financial research and
practice in a particular area of finance.
The essays in each volume are intended for practicing finance professionals, graduate students, and advanced undergraduate students. The goal of each volume is
to encapsulate the current state of knowledge in a particular area of finance so that
the reader can quickly achieve a mastery of that special area of finance.
www.it-ebooks.info
IMPLEMENTING
ENTERPRISE RISK
MANAGEMENT
Case Studies and Best Practices
Editors
John R.S. Fraser
Betty J. Simkins
Kristina Narvaez
The Robert W. Kolb Series in Finance
www.it-ebooks.info
Cover Design: Wiley
Cover Image: iStock.com/clauiad
Copyright 2015 by John R.S. Fraser, Betty J. Simkins, Kristina Narvaev. All rights
reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted
in any form or by any means, electronic, mechanical, photocopying, recording, scanning,
or otherwise, except as permitted under Section 107 or 108 of the 1976 United States
Copyright Act, without either the prior written permission of the Publisher, or
authorization through payment of the appropriate per-copy fee to the Copyright
Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978)
646-8600, or on the Web at www.copyright.com. Requests to the Publisher for permission
should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River
Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at
http://www.wiley.com/go/permissions.
Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their
best efforts in preparing this book, they make no representations or warranties with
respect to the accuracy or completeness of the contents of this book and specifically
disclaim any implied warranties of merchantability or fitness for a particular purpose. No
warranty may be created or extended by sales representatives or written sales materials.
The advice and strategies contained herein may not be suitable for your situation. You
should consult with a professional where appropriate. Neither the publisher nor author
shall be liable for any loss of profit or any other commercial damages, including but not
limited to special, incidental, consequential, or other damages.
For general information on our other products and services or for technical support, please
contact our Customer Care Department within the United States at (800) 762-2974, outside
the United States at (317) 572-3993 or fax (317) 572-4002.
Wiley publishes in a variety of print and electronic formats and by print-on-demand.
Some material included with standard print versions of this book may not be included in
e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is
not included in the version you purchased, you may download this material at
http://booksupport.wiley.com. For more information about Wiley products, visit
www.wiley.com.
Library of :
ISBN 978-1-118-69196-0 (Hardcover)
ISBN 978-1-118-74576-2 (ePDF)
ISBN 978-1-118-74618-9 (ePub)
Printed in the United States of America.
10 9 8 7 6 5 4 3 2 1
www.it-ebooks.info
To Wendy, my wonderful wife and my inspiration, and to my
parents who instilled in me a lifelong thirst for learning.
John Fraser
To my husband (Russell) and our family: sons and daughtersin-law (Luke & Stephanie and Walt & Lauren), daughter and
son-in-law (Susan & Jason), and our youngest daughter (April).
Thank you for your love, support, and encouragement!
Betty Simkins
I would like to thank my husband and four children for supporting me on my journey of writing two chapters and co-editing this
book. I would also like to thank the Risk and Insurance Management Society for supporting me during my educational years
and providing great workshops and conferences on enterprise
risk management.
Kristina Narvaez
www.it-ebooks.info
www.it-ebooks.info
Contents
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 Hakan Jankensg ard
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 Lsse
7 Turning the Organizational Pyramid Upside Down:
Ten Years of Evolution in Enterprise Risk Management
at United Grain Growers 107
John Bugalla
ix
www.it-ebooks.info
x Contents
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 Banks 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
18 335
Stephen McPhie and Rick Nason
www.it-ebooks.info
CONTENTS xi
19 Kilgore Custom Milling 363
Rick Nason and Stephen McPhie
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 Societe Gen erale 461
Steve Lindo
24 The Role of VaR 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
www.it-ebooks.info
xii Contents
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 Slawomir 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 Malaysias 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
www.it-ebooks.info
Foreword
Enterprise Risk Management is an evolving discipline focused on a complex and still imperfectly-understood subject. In such a situation, science is
advanced best by collecting data from multiple, independent sites. A rich
set of observations educates the fields scholars and practitioners and provides the
foundation for them to develop descriptive and normative theories as well as codified best practices about the subject.
The authorsFraser, Simkins, and Narvaezhave done an invaluable service
to advance the science of enterprise risk management by collecting an extensive
number of wonderful case studies that describe innovative risk management practices in a diverse set of companies around the world. This book should be an
extremely valuable source of knowledge for anyone interested in the emerging
and evolving field of risk management. We should be grateful to the editors and
to each chapter author for expanding the body of knowledge for risk management
professionals and academics.
Robert S. Kaplan
Senior Fellow, Marvin Bower Professor
of Leadership Development, Emeritus
Harvard University
xiii
www.it-ebooks.info
www.it-ebooks.info
CHAPTER 1
Enterprise Risk Management
Case Studies
An Introduction and Overview
JOHN R.S. FRASER
Senior Vice President, Internal Audit, and former Chief Risk Officer, Hydro One
Networks Inc.
BETTY J. SIMKINS
Williams Companies Chair of Business and Professor of Finance, Oklahoma State
University
KRISTINA NARVAEZ
President and Owner of ERM Strategies, LLC
Businesses, business schools, regulators, and the public are now scrambling to
catch up with the emerging field of enterprise risk management.
Robert Kaplan (quote from Foreword in Fraser and Simkins, 2010)
Most executives with MBA degrees were not taught ERM. In fact, there are only
a few universities that teach ERM. So some business school graduates are strong
in finance, marketing, and management theory, but they are limited in terms of
critical thinking, business acumen, and risk analysis skills.
Paul Walker1
THE EVOLUTION OF ENTERPRISE
RISK MANAGEMENT
Over the past two decades enterprise risk management (ERM) has evolved
from concepts and visions of how risks should be addressed to a methodology that is becoming entrenched in modern management and is now
increasingly expected by those in oversight roles (e.g., governing bodies and
regulators). As Felix Kloman describes in his chapter A Brief History of Risk Management, published in Fraser and Simkins (2010), many of the concepts go back
a very long time and many of the so-called newly discovered techniques can be
1
www.it-ebooks.info
2 Implementing Enterprise Risk Management
referenced to the earlier writings and practices described by Kloman. However,
it is only from around the mid-1990s that the concept of giving a name to managing risks in a holistic way across the many operating silos of an enterprise started
to take hold. In the 1990s, terms such as integrated risk management and enterprisewide risk management were also used. Many thought leaders, for example, those
who created ISO 31000,2 believe that the term risk management is all that is needed
to describe good risk management; however, many others believe that the latter
term is often used to describe risk management at the lower levels of the organization and does not necessarily capture the concepts of enterprise-level approaches
to risk. As a result, the term ERM is used throughout this book.
As ERM continues to evolve there is still much discussion and confusion over
exactly what it is and how it should be achieved. It is important to realize that
it is still evolving and may take many more years before it is fully codified and
practiced in a consistent way. In fact, there is a grave danger now of believing
that there is only one way of doing ERM. This is probably a mistake by regulators who have too eagerly seized some of these concepts and are trying to impose
them when the methods are not fully understood, and in some cases the requirements are unlikely to produce the desired results. As Fraser and Simkins (2010)
noted in their first book on ERM: While regulatory interest can force ERM into
companies, if not done well, it can become another box-ticking exercise that adds
little value.3
The leading and most commonly agreed4 guideline to holistic risk management is ISO 31000. However, it should be mentioned that in the United States
the COSO 2004 Enterprise Risk ManagementIntegrated Framework has been the
dominant framework used to date. Many organizations are currently adopting
one or the other of these frameworks and then customizing them to their own
context.
WHY THE NEED FOR A BOOK WITH ERM
CASE STUDIES?
Following the success of the earlier Enterprise Risk Management: Todays Leading
Research and Best Practices for Tomorrows Executives by Fraser and Simkins (2010),
we found through our own teaching experiences, and by talking to others, that
there was an urgent need for a university-level textbook of ERM case studies to
help educate executives, risk practitioners, academics, and students alike about
the evolving methodology. As a result, Fraser and Simkins, together with Kristina
Narvaez, approached many of the leading ERM specialists to write case studies for
this book.
Surveys have also shown that there is a dire need for more case studies on ERM
(see Fraser, Schoening-Thiessen, and Simkins 2008). Additionally, surveys of risk
executives report that business risk is increasing due to new technologies, faster
rate of change, increases in regulatory risk, and more (PWC 2014). As Paul Walker
of St. Johns University points out in the opening quote of the 2014 American Productivity & Quality Center (APQC) report on ERM, Most executives with MBA
degrees were not taught ERM. In fact, there are only a few universities that teach
ERM. So some business school graduates are strong in finance, marketing, and
www.it-ebooks.info
ENTERPRISE RISK MANAGEMENT CASE STUDIES 3
management theory, but they are limited in terms of critical thinking, business acumen, and risk analysis skills. Learning Centered Teaching (LCT), as discussed in
Chapter 2, is an ideal way to achieve this. Using LCT and the case study approach,
students actively participate in the learning process through constructive reflective
reasoning, critical thinking and analysis, and discussion of key issues. This is the
first book to provide such a broad coverage of case studies on ERM.
The case studies that follow are from some of the leading academics and practitioners of enterprise risk management. While many of the cases are about real-life
situations, there are also those that, while based on real-life experiences, have had
names changed to maintain confidentiality or are composites of several situations.
We are deeply indebted to the authors and to the organizations that agreed so
kindly to share their stories to help benefit future generations of ERM practitioners. In addition, we have added several chapters where we feel the fundamentals
of these specialized techniques (e.g., VaR) deserve to be understood by ERM students and practitioners. Each case study provides opportunities for executives, risk
practitioners, and students to explore what went well, what could have been done
differently, and what lessons are to be learned.
Teachers of ERM will find a wealth of material to use in demonstrating ERM
principles to students. These can be used for term papers or class discussions, and
the approaches can be contrasted to emphasize different contexts that may require
customized approaches. This book introduces the reader to a wide range of concepts and techniques for managing risks in a holistic way, by correctly identifying
risks and prioritizing the appropriate responses. It offers a broad overview of the
various types of ERM techniques, the role of the board of directors, risk tolerances,
profiles, workshops, and allocation of resources, while focusing on the principles
that determine business success.
Practitioners interested in implementing ERM, enhancing their knowledge on
the subject, or wishing to mature their ERM program, will find this book an absolute must resource to have. Case studies are one of the best ways to learn more on
this topic.
This book is a companion to Enterprise Risk Management: Todays Leading
Research and Best Practices for Tomorrows Executives (Fraser and Simkins 2010).
Together, these two books can create a curriculum of study for business students
and risk practitioners who desire to have a better understanding of the world of
enterprise risk management and where it is heading in the future. Boards and
senior leadership teams in progressive organizations are now engaging in building
ERM into their scenario-planning and decision-making processes. These forwardlooking organizations are also integrating ERM into the business-planning process with resource allocation and investment decisions. At the business unit
level, ERM is being used to measure the performance of risk-taking activities of
employees.
As these case studies demonstrate, ERM is a continuous improvement process
and takes time to evolve. As can be gleaned from these case studies, most firms that
have taken the ERM journey started with a basic ERM language, risk identification,
and risk-assessment process and then moved down the road to broaden their programs to include risk treatments, monitoring, and reporting processes. The ultimate goal of ERM is to have it embedded into the risk culture of the organization
and drive the decision-making process to make more sound business decisions.
www.it-ebooks.info
4 Implementing Enterprise Risk Management
SUMMARY OF THE BOOK CHAPTERS
As mentioned earlier, the purpose of this book is to provide case studies on ERM
in order to educate executives, risk practitioners, academics, and students alike
about this evolving methodology. To achieve this goal, the book is organized into
the following sections:
Part I: Overview and Insights for Teaching ERM
Part II: ERM Implementation at Leading Organizations
Part III: Linking ERM to Strategy and Strategic Risk Management
Part IV: Specialized Aspects of Risk Management
Part V: Mini-Cases on ERM and Risk
Part VI: Other Case Studies
Brief descriptions of the contributors and the chapters are provided next.
PART I: OVERVIEW AND INSIGHTS FOR
TEACHING ERM
The first two chapters provide an overview of ERM and guidance on ERM education. As we have pointed out, education on ERM is crucial and more universities
need to offer courses in this area. Our conversations with many ERM educators
and consultants highlight how extremely challenging it is to achieve excellence in
ERM education.
Chapter 2, An Innovative Method to Teaching Enterprise Risk Management: A Learner-Centered Teaching Approach, offers insights and suggestions
on teaching ERM. This chapter covers the concept of flipping the classroom with
learner-centered teaching (LCT), distinguishes it from traditional lectures, and
describes how it can be used in teaching ERM. The LCT approach emphasizes
active student participation and collaboration on in-class activities such as case
studies versus the traditional lecture approach. This chapter provides several
examples as to how LCT can be applied in teaching ERM, utilizing Fraser and
Simkins (2010) book. David R. Lange and Betty J. Simkins, both experienced ERM
educators, team together to write this chapter. David Lange, DBA, is an Auburn
University Montgomery (AUM) Distinguished Research and Teaching Professor of
Finance. He has received many prestigious awards for both research and teaching
from the University and from several academic associations. He has taught many
courses in the area of risk management and has consulted in a significant number of individual and class insurancerelated cases in both state and federal court.
Betty Simkins, PhD, the Williams Companies Chair of Business and Professor of
Finance at Oklahoma State University, is coeditor of this book.
PART II: ERM IMPLEMENTATION AT
LEADING ORGANIZATIONS
Part II is a collection of ERM case studies that give examples of how ERM was
developed and applied in major organizations around the world. Note that there
is no perfect ERM case study and the objective is for readers to assess what they
believe was successful or not so successful about these ERM programs.
www.it-ebooks.info
ENTERPRISE RISK MANAGEMENT CASE STUDIES 5
The first case study in this book describes ERM at Mars, Inc. Larry Warner, who
is the former corporate risk manager at Mars, Inc. and now is president of Warner
Risk Group, describes the ERM program at the company in Chapter 3. Mars is
a global food company and one of the largest privately held corporations in the
United States. It has more than 72,000 associates and annual net sales in excess
of $33 billion across six business segmentsPetcare, Chocolate, Wrigley, Food,
Drinks, and Symbioscience. Its brands include Pedigree, Royal Canin, M&Ms,
Snickers, Extra, Skittles, Uncle Bens, and Flavia. With such complex business operations, Mars recognized the importance of providing its managers with a tool to
knowledgably and comfortably take risk in order to achieve its long-term goals.
Mars business units use its award-winning process to test their annual operating
plan and thereby increase the probability of achieving these objectives.
The case study in Chapter 4 entitled Value and Risk: ERM in Statoil was written by Alf Alviniussen, who is the former Group Treasurer and Senior Vice President of Norsk Hydro ASA, Oslo, Norway, and Hakan Jankensg ard who holds
a PhD in risk management from Lund University, Sweden. Hakan is also a for-
mer risk manager of Norsk Hydro. In this case study, the authors discuss ERM at
Statoil, one of the top oil and gas companies in the world, located in Norway. In
Statoil, understanding and managing risk is today considered a core value of the
company, which is written into the corporate directives and widely communicated
to employees. ERM is thoroughly embedded in the organizations work processes,
and its risk committee has managed the transition from a silo-mentality to promoting Statoils best interests in areas where risk needs to be considered.
Chapter 5, called ERM in Practice at University of California Health Systems,
is written by their former Chief Risk Officer (CRO), Grace Crickette, who is now
the Senior Vice President and Chief Risk and Compliance Officer of AAA Northern
California, Nevada, and Utah. The University of Californias (UC) Health System
is comprised of numerous clinical operations, including five medical centers that
support the clinical teaching programs for the universitys medical and health science school and handle more than three million patient visits each year. ERM plays
an important role at the UC Health System and assists the organization in assessing and responding to all risks (operational, clinical, business, accreditation, and
regulatory) that affect the achievement of the strategic and financial objectives of
the UC Health System.
The descriptive case study in Chapter 6, written by Dr. Mark Frigo from
DePaul University and Hans Lsse, the Strategic Risk Manager of the LEGO
Group, provides a great example of integrating risk management in strategy development and strategy execution at the LEGO Group, which is based on an initiative
started in late 2006 and led by co-author Hans Lsse. The LEGO methodology is
also part of the continuing work of the Strategic Risk Management Lab at DePaul
University, which is identifying and developing leading practices in integrating
risk management with strategy development and execution.
United Grain Growers (UGG), a conservative 100-year-old Winnipeg, Canadabased grain handler and distributor of farm supplies, was an ERM pioneer. Chapter 7 called Turning the Organizational Pyramid Upside Down: Ten Years of Evolution in Enterprise Risk Management at United Grain Growers analyzes the ERM
program at United Grain Growers 15 years later. When UGG announced that it
had implemented a new integrated risk-financing program in 1999, it received
a great deal of attention in the financial press. CFO magazine hailed the UGG
www.it-ebooks.info
6 Implementing Enterprise Risk Management
program as the deal of the decade. The Economist characterized it as a revolutionary advance in corporate finance, and Harvard University created a UGG
case study. While most outside attention focused on the direct financial benefits
of implementing the program (protection of cash flow, the reduced risk-capital
required, and a 20 percent increase in stock price), scant attention was given to the
less tangible and therefore less measurable issues of governance, leadership, and
corporate culturethe conditions that enabled such innovation. It was a combination of a collaborative leadership open to new ideas, a culture of controlled risk
taking, and active risk oversight by the board that produced a strategic approach
to UGGs risk management process. This chapter is written by John Bugalla, who
is the principal of ermINSIGHTS.
John Hargreaves has written Chapter 8 titled Housing Association Case
Study of ERM in a Changing Marketplace. He has a mathematics degree from
Cambridge University and six years strategy consultancy experience at KPMG.
This case study features four real-life charitable housing associations in England
and Wales, each with a different strategy and risk environment. Simple yet practical tools to assist in risk identification and prioritization are also presented. This
case study has two main aims. The first is to help develop an understanding of
the importance of ERM in a charitable context, showing that modern charities are
often very active organizations that face significant risks. Second, the case aims to
illustrate the need for a close relationship between risk assessment and strategy
development, particularly in sectors where objectives are defined in social as well
as economic terms. Each of the four cases has a different perspective and challenges
the student or practitioner to identify and assess the risk and develop possible risk
treatments for each.
Chapter 9, Lessons from the Academy: ERM Implementation in the University Setting, was written by Anne E. Lundquist. She is pursuing a PhD in the
Educational Leadership program at Western Michigan University with a concentration in Higher Education Administration. This chapter explores the unique
aspects of the University of Washingtons (UW) risk environment, including how
leadership, goal-setting, planning, and decision-making differ from the for-profit
sector. The lack of risk management regulatory requirements, combined with cultural and environmental differences, helps explain why there are a limited number
of fully evolved ERM programs at colleges and universities. The second half of the
chapter explores the decision to adopt and implement ERM at UW, including a
description of early decisions, a timeline of how the program evolved, a discussion of the ERM framework, and examples of some of the tools used in the risk
management process. It traces the evolution of the UW program as well as demonstrates decisions that administrators made to tailor ERM to fit the decentralized
culture of a university.
The case study in Chapter 10, Developing Accountability in Risk Management: The British Columbia Lottery Corporation Case Study, demonstrates how
ERM was successfully implemented in a Canadian public sector organization over
a 10-year period. Jacquetta Goy, author of this chapter, was the Senior Manager,
Risk Advisory Services at British Columbia Lottery Corporation and was responsible for establishing and developing the ERM program. Currently, Jacquetta is
the Director of Risk Management at Thompson Rivers University, Canada. This
case study focuses on initiation, early development, and sustainment of the ERM
www.it-ebooks.info
ENTERPRISE RISK MANAGEMENT CASE STUDIES 7
program, highlighting some of the barriers and enablers that affected implementation. This case study includes a focus on developing risk profiles; the role of
risk managers, champions, and committees; and the development of effective risk
evaluation tools. The approach to ERM has evolved from informal conversations
supported by an external assessment, through a period of high-level corporate
focus supported by a dedicated group of champions using voting technology to
an embedded approach, where risk assessment is incorporated into both operational practice and planning.
Chapter 11, Starting from Scratch: The Evolution of ERM at the Workers Compensation Fund, describes the evolution of a formal ERM program at a midsize
property casualty insurance carrier. This chapter is authored by Dan Hair, the CRO
of the Workers Compensation Fund. In this chapter, the motivations of executive
management and the board of directors in taking existing strategic risk management discussions to a higher level are reviewed. The by
the company to develop the ERM program are explained in chronological order.
External resources used are also commented upon. The chapter concludes with a
discussion of striking an ongoing balance between program rigor, documentation,
and business needs.
Chapter 12, Measuring Performance at Intuit: A Value-Added Component
in ERM Programs, shows how Intuit, maker of Quicken, QuickBooks, and TurboTax, is committed to creating new and easier ways for consumers and businesses to
tackle lifes financial chores, giving them more time to live their lives and
run their businesses. This case study shows how Intuit, a global company, is
exposed to a wide range of customer-related and operational risks. Understanding the risk landscape enables Intuit to formulate and execute strategies to address
potential pitfalls and opportunities. The author, Janet Nasburg, is Chief Risk Officer at Intuit. Janet is responsible for driving Intuits ERM capability, ensuring that
the company appropriately balances opportunities and risks to achieve optimal
business results. Before Intuit, Janet spent 16 years in various finance roles at Visa,
and has more than 30 years of risk management and finance experience.
Chapter 13 describes TD Banks ERM program and how it has been developed
to reinforce the risk culture and ensure that all stakeholders have a common understanding of how risks are addressed within the organization. This is achieved by
identifying the risks to TD Banks business strategy and operations, determining
the types of risk it is prepared to take, establishing policies and practices to govern risks, and following an ERM framework to manage those risks. This chapter is
co-authored by Paul Cunha and Kristina Narvaez. Paul Cunha is Vice President,
Enterprise Risk Management at TD Bank. During his career at TD Bank, he has
spent time in risk management, internal audit, retail banking, commercial banking, and corporate and investment banking. Kristina Narvaez is the president and
owner of ERM Strategies, LLC, and is co-editor of this book.
PART III: LINKING ERM TO STRATEGY AND
STRATEGIC RISK MANAGEMENT
Part III of this book demonstrates the link between ERM and strategy in what is
now being called strategic risk management (SRM). SRM represents an important
evolution in enterprise risk management, shifting from a reactive approach to a
www.it-ebooks.info
8 Implementing Enterprise Risk Management
proactive approach in dealing with the large spectrum of risks across the organization. These case studies view their risk-taking activities in a strategic way, not
only to protect the organizations value and assets, but also to be able to capture
new value that is in alignment with the strategic goals of the organization.
Zurich Insurance Group, the case study in Chapter 14, demonstrates the link
between ERM and strategy. Zurich is a global insurance carrier and is exposed to
a wide range of risks. Zurich recognizes that taking the right risks is a necessary
part of growing and protecting shareholder value. It is careful not to miss valuable market opportunities that could attract the best talent and investor capital, but
must also balance the growth opportunities with the reality that it is operating in
a complex world economy. This chapter is co-authored by Linda Conrad, Director
of Strategic Business Risk Management at Zurich and Kristina Narvaez, president
and owner of ERM Strategies, LLC and co-editor of this book. Linda leads a global
team responsible for delivering tactical solutions to Zurich and to its customers on
strategic issues such as business resilience, supply chain risk, ERM, risk culture,
and total risk profiling.
Chapter 15, Embedding ERM into Strategic Planning at the City of Edmonton, is written by Ken Baker, who is their ERM Program Manager. This study
examines the process used by the City of Edmonton in Alberta, Canada, to establish its strategic ERM model. After examining several existing frameworks, the
City decided on a framework based on the ISO 31000 risk management standard,
but customized to suit the Citys needs. During the process, administration had
to weigh factors common to any large organization, as well as those specific to
governments in general and municipalities in particular. The chronicling of this
process may assist those in similar organizations to more successfully implement
their own ERM and SRM programs.
Chapter 16 describes a brief history of the evolution of enterprise risk
management and describes a new and innovative approach (value mapping) to
measuring the potential value by taking risks. This chapter also provides a model
for incorporating the ERM process into strategic planning. John Bugalla, Principal
of ermINSIGHTS and author of Chapter 7, and James Kallman, a finance professor
at St. Edwards University, co-author this chapter. Johns experience includes
30 years in the risk management profession serving as Managing Director of
Marsh & McLennan, Inc., Willis Group, Plc., and Aon Corp., before founding
ermINSIGHTS. James teaches courses in finance, statistics, and risk management.
PART IV: SPECIALIZED ASPECTS OF
RISK MANAGEMENT
Part IV of the book captures unique aspects of ERM so that the reader can learn
about the many broad applications, including insights into managing specific
types of risk. This part starts with a case study in Chapter 17 of the challenges
of risk management within a typical police department. This case is followed by
eight additional chapters addressing other intriguing aspects of risk management.
Andrew Graham reveals the complex and challenging aspects of risk management in Chapter 17, Developing a Strategic Risk Plan for the Hope City Police Service. This fictional case study was developed based on many years of teaching risk
management to police forces. The setting is a medium-sized but growing city that
www.it-ebooks.info
ENTERPRISE RISK MANAGEMENT CASE STUDIES 9
is facing many issues, including changes in demographics, traffic issues, budgetary
challenges, and so on. The student is required to act as a consultant who has been
hired by the chief of police to assist him in briefing the Police Services Board and the
mayor in understanding the most critical risks to their objective of having a bestin-class police service for their citizens. Andrew Graham researches, teaches, and
writes on public-sector management, financial management, integrated risk management, and governance at Queens University School of Policy Studies, Canada,
as well as a variety of international and Canadian venues. Andrew had an extensive career in Canadas criminal justice system and has taught and worked with
police services and police boards and commissioners in a variety of ways for the
past 10 years.
Chapter 18, Blue Wood Chocolates, is designed to facilitate discussion of the
implementation of an ERM framework, corporate governance issues, and commodity risk management. The situation that this fictional company faces is typical of many midsize companies that have performed satisfactorily in the past but
are exposed, often unknowingly, to major potential risks and do not have the
internal governance and risk management structures to identify, quantify, and
manage such risks adequately. In particular, this case illustrates commodity and
foreign currency exposures, and challenges the student to investigate the specifics
of hedging such positions. Rick Nason, PhD, CFA, and Stephen McPhie, CA, coauthored this chapter. Rick is an associate professor of finance at Dalhousie University, Canada, and is also a founding partner of RSD Solutions, a risk management
consultancy firm. His coauthor, Stephen McPhie, CA, is a partner of RSD Solutions Inc. and has also held various positions in the United States, Canada, and the
United Kingdom with a major Canadian bank.
Foreign exchange (FX) risk management is one of the greatest financial risks a
company faces when expanding globally. Chapter 19, Kilgore Custom Milling,
illuminates the myriad of issues that arise when hedging FX risk, such as faced by
a midsize original equipment manufacturer (OEM) operating in the automobile
industry. Kilgore Custom Milling (a fictional company) needs to develop a hedging strategy to manage its foreign exchange risk for a new contract and decide what
type of derivatives to use, what size of hedge to implement, and how the companys financial risk management fits in with its overall ERM process. Rick Nason
and Stephen McPhie, coauthors of Chapter 18, team together again to explore the
complex and challenging issues that many companies face with FX risk.
ERM is currently of very high interest to companies operating in the Middle East, an area that presents unique challenges for implementation. Alexander
Larsen captures this scenario in Chapter 20, Implementing Risk Management
within Middle Eastern Oil and Gas Companies. This case study is based on reallife examples of Middle Eastern oil and gas companies and captures the challenges
of implementing risk management in the Middle East. Alexander Larsen holds a
degree in risk management from Glasgow Caledonian University and is a Fellow
of the Institute of Risk Management. He has over 10 years of experience across a
wide range of sectors, including oil and gas, construction, utilities, finance, and the
public sector. Alexander has considerable expertise in training and working with
organizations to develop, enhance, and embed their ERM.
Public safety organizations are increasingly adopting sophisticated enterprise
governance and risk management techniques as a means of managing their
www.it-ebooks.info
10 Implementing Enterprise Risk Management
programs and expenditures. Root cause analysis can provide these agencies with
detailed insights into the problems and issues they face, and provide them with
the information they need to make informed decisions on risk management.
Chapter 21, The Role of Root Cause Analysis in Public Safety ERM Programs,
explores these issues by presenting six common root cause analysis techniques
that are applied in a public safety or law enforcement environment. The chapter
author, Andrew Bent, is a practicing risk manager with a large Canadian integrated energy company and was previously in charge of ERM for one of Canadas
largest municipal police services.
Chapter 22, JAA Inc.A Case Study in Creating Value from Uncertainty: Best
Practices in Managing Risk, provides extensive details about ERM implementation in a fictional international organization and discusses topics including governance structure, the processes, and the various tools used. The case is built on the
principles and guidance of ISO 31000 and the implementation guidance created
by The Australian and New Zealand Hand Book HB 436. This case emphasizes the
roles of the heads of the internal audit function and the risk management function. The three coauthors of this chapter have extensive experience in risk management. Julian du Plessis, Head of Internal Audit at AVBOB Mutual Assurance
Society, South Africa, has over eight years of financial sector experience. Arnold
Schanfield is a Principal with Schanfield Risk Management Advisors LLC, and is an
internal audit and risk professional with diversified industry expertise. Alpaslan
Menevse is currently the Risk Officer at Sekerbank T.A.S., which has in excess of
310 branches in Turkey. He has 28 years of experience in information systems, both
as an academic and as a practitioner.
A book on ERM case studies is not complete without some coverage of
risk management failures. One of the most famous failures involving operational risk is discussed in Chapter 23, Control Complacency: Rogue Trading
at Societ e G en erale. In January 2008, Soci et e G en erale uncovered 49 billion of
unauthorized equity positions at its Paris head office, which cost 4.9 billion to
unwind. Using an interactive format, this case study analyzes the origins, actors,
causes, and consequences of this notorious control breakdown and derives risk
management lessons from it in the areas of corporate governance, controls, compliance, systems, technology, and reputation risk. The author, Steve Lindo, Principal, SRL Advisory Services, has many years of experience in ERM and provides a
thorough and fascinating coverage of this disaster.
Value at risk (VaR) is one of the most widely used techniques to measure
financial risks, particularly in the area of investment portfolios. However, it is a
technique that has not been fully understood by many risk managers. In Chapter
24, The Role of VaR in Enterprise Risk Management: Calculating Value at Risk
for Portfolios Held by the Vane Mallory Investment Bank, VaR is described along
with its underlying assumptions, advantages, and disadvantages. Several examples for single assets are detailed for both the dollar and percentage VaR estimation
methods. The main focus of this case study is a tutorial on calculating VaR for portfolios of assets using the covariance approach utilized in portfolio theory. Allissa
A. Lee coauthored this case study with Betty J. Simkins. Allissa is an assistant
professor of finance in the College of Business Administration at Georgia Southern University. She has published several academic articles and also worked
in the mortgage industry for MidFirst Bank. Betty, coeditor of this book, is the
www.it-ebooks.info
ENTERPRISE RISK MANAGEMENT CASE STUDIES 11
Williams Companies Chair of Business and Professor of Finance at Oklahoma
State University.
Chapter 25, Uses of Efficient Frontier Analysis in Strategic Risk Management, covers an advanced analytical technique, efficient frontier analysis (EFA),
where complex property and casualty risk profiles are being considered. This chapter provides insights into risk portfolio volatility, pricing, and insurance layering
efficiency using EFA and is applied to a risk portfolio that presents catastrophic
loss potential within the context of strategic risk management. This chapters coauthors are Ward Ching, who is Vice President, Risk Management Operations, at
Safeway Inc., and Loren Nickel, who is Regional Director and Actuary, Actuarial
and Analytics Practice, at Aon Global Risk Consulting. Both authors have extensive
experience in property and casuality risk management and share their expertise in
this specialized topic of ERM.
PART V: MINI-CASES ON ERM AND RISK
Mini-cases are a very powerful and highly useful resource in teaching ERM and
can be easily utilized in short time periods such as a one-hour class segment. This
part fills this gap in the education literature on ERM and includes six fictional minicases that have been developed by leading risk practitioners who draw from the
wealth of their experiences in various applications of risk management.
Chapter 26, Bim Consultants Inc., is based on a real event in which a
company was faced with an important strategic acquisition decision. All names
and data have been changed for confidentially reasons. The purpose of the case is
to illustrate the complexity of making strategic decisions and how greed and ego
can cause a firm to change strategy that may put the business at risk. The author,
John Fraser, Senior Vice President, Internal Audit, and former Chief Risk Officer
of Hydro One Networks Inc., is also coeditor of this book. Fraser is currently
an adjunct professor at York University, Canada, and a member of the faculty
of the Directors College. He is a recognized authority on ERM and has written
extensively on the topic.
Chapter 27, Nerds Galore, is based on a fictitious small services company
that appears to be on the verge of a major downturn. The focus of the case study is
human resourcesrelated risks, and the exercise is to conduct a risk assessment to
aid in making the decision on whether to proceed with a major human resources
strategy. This case study could be used as the basis for an actual risk workshop simulation with students role-playing various positions on the management team. Rob
Quail, the author of this case study, draws on his extensive experience as Director
of ERM at Hydro One Networks Inc., and provides an excellent mini-case to illuminate ERM applications.
Can a company have a successful ERM program that does not involve a key
function, such as the legal department? And if not willing to participate, how do
you convince this department to commit to ERM? The reader is challenged with
tackling this crucial issue in Chapter 28, The Reluctant General Counsel. This
mini-case is about the implementation of ERM at a software company and illustrates the challenges faced when the general counsel of the company has reservations and is not willing to support the implementation. The author, Norman
Marks, CPA, CRMA, has been chief audit executive of major global corporations
www.it-ebooks.info
12 Implementing Enterprise Risk Management
for over 20 years, and is highly regarded in the global profession of internal auditing. Furthermore, he is a prolific blogger about internal audit, risk management,
governance, and compliance.
Chapter 29, Transforming Risk Management at Akawini Copper, describes
how the approach to managing risk can be transformed and enhanced in a company. The case study is based on a hypothetical mining company, Akawini Copper,
that has recently been acquired by an international concern. It draws on the practical concepts of ISO 31000 to show how a weak approach to risk management can be
enhanced to be more robust and comprehensive by following a logical framework
and transformation plan. The author, Grant Purdy, has worked in risk management for more than 35 years, across a wide range of industries and in more than
25 countries. Grant is coauthor of the 2004 version of AS/NZS 4360 and also of
AS/NZS 5050, a standard for managing disruption-related risk, and has also written many risk management handbooks and guides.
Richard Leblanc, PhD, who is a governance lawyer, certified management consultant, and Associate Professor of Law, Governance, and Ethics at York University, draws on his extensive experience in board of director effectiveness when
writing Chapter 30, Alleged Corruption at Chessfield: Corporate Governance and
the Risk Oversight Role of the Board of Directors. Richard has advised regulators on corporate governance guidelines, and, as part of his external professional
activities, has served as an external board evaluator and governance adviser for
many companies, as well as in an expert witness capacity in litigation concerning
corporate governance reforms. This case deals with the inner workings of a large
organizations board of directors, including allegations of alleged corruption and
self-dealing, and provides the reader with a captivating application of risk management shortcomings in governance and internal controls.
Diana Del Bel Belluz, president and founder of Risk Wise, Inc., draws on her
experience in operational risk when writing Chapter 31, Operational Risk Management Case Study: Bon Boulangerie. This mini-case provides the opportunity
for students to discuss and present their knowledge of operational risk. It describes
the challenges and opportunities faced by a fictional bakery business in a small
city. The bakerys owner has decided to expand the business for greater rewards,
but in doing so is faced with a number of operational challenges. Additional information on the steps of operational risk management is available in Chapter 16 in
Fraser and Simkins (2010). Diana has many years of consulting experience in ERM,
and advances the practice of ERM through her thought leadership as an educator,
conference organizer, speaker, and author of ERM resources.
PART VI: OTHER CASE STUDIES
Many risk management lessons can be learned from the financial crisis of 2008,
and we begin this part with a chapter addressing this topic: Chapter 32, Constructive Dialogue and ERM: Lessons from the Financial Crisis. In this chapter,
Tom Stanton eloquently examines the critical distinctive factors between successful and unsuccessful firms in the crisis and refers to the presence or absence of
these factors as constructive dialogue. Successful firms managed to create productive and constructive tension between those in the firm who wanted to do deals or
offer certain financial products and services and those who were responsible for
www.it-ebooks.info
ENTERPRISE RISK MANAGEMENT CASE STUDIES 13
limiting risk exposures. Instead of simply deciding to do a deal or not, successful
firms considered ways to hedge risks or otherwise reduce exposure from doing
the deal. Thomas H. Stanton is a Fellow of the Center for Advanced Governmental Studies at Johns Hopkins University, a director of the Association of Federal
Enterprise Risk Management, a former director of the National Academy of Public
Administration, and a former member of the federal Senior Executive Service.
An important objective in this book is to provide global coverage about ERM
by including insightful applications in various countries. Poland, after the transition into the free market economy in 1989, became open to knowledge and transfer
of the best practices from around the world. Chapter 33, Challenges and Obstacles
of ERM Implementation in Poland, draws on years of research, both formal and
informal, and documents the countrys first approaches to ERM implementation.
The successes, challenges, and weaknesses are described and provide a valuable
lesson for other countries, regions, or even organizations in how they might go
about implementing ERM. Two experts on ERM implementation in Poland teamed
together to write this chapter. Zbigniew Krysiak, PhD, is an associate professor of
finance at the Warsaw School of Economics in Poland. He is the author or coauthor of more than 100 publications, intended both for practitioners and for the academic community, concerning finance, risk management, financial engineering,
and banking. His coauthor, Slawomir Pijanowski, PhD, is president of the POL-
RISK Risk Management Association in Poland, where he is responsible for development of good risk management practices for the Polish market. He is coauthor
of the Polish book titled Risk Management for Sustainable Business published by the
Polish Ministry of the Economy and has many other accomplishments in the area
of risk management.
Chapter 34 entitled Turning Crisis into Opportunity: Building an ERM Program at General Motors was written by leaders of ERM at GMMarc Robinson,
Lisa Smith, and Brian Thelen. This case study chronicles the ground-up implementation of ERM at General Motors Company (GM), starting in 2010 after it emerged
from bankruptcy. While GM recognizes that its ERM is a work in progress, there
have been important successes both in improving the management of risk and
making better business decisions. Critical to these successes has been a clear strategic vision on adding value for the business leaders that are the true risk owners,
unique decision tools such as game theory, and a continuous improvement mindset, including robust lessons learned. The study describes the 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.
The last case study in the book is also extremely insightful because it provides
an excellent example of an ERM application at a company in Asia. The authors
demonstrate in Chapter 35 how Astro, a Malaysia-based media company, uses
ERM to grow through international acquisitions, and how it implements enterprise risk management not only to ensure sound risk management by its foreign
subsidiaries and joint ventures, but also to make better risk/return decisions on
its portfolio of direct investments. Both authors are authorities on ERM implementation globally. Ghislain Giroux Dufort is President of Baldwin Risk Strategies Inc., a consulting firm advising boards of directors and management teams
on risk governance and ERM and has over 25 years of experience. Patrick Adam
Kanagaratnam Abdullah is the Vice President of ERM for Astro Overseas Limited
www.it-ebooks.info
14 Implementing Enterprise Risk Management
(AOL), Malaysia. He specializes in the implementation of ERM practices across
AOLs investments and has over 21 years of experience in various areas of risk
management.
CONCLUSION
As outlined above, the case studies and specialized topic chapters in this book
present an impressive coverage of new information on enterprise risk management, and all chapters are written by leading ERM experts globally. To our
knowledge, this is the first book to be published that provides such comprehensive
coverage of ERM case studies. We hope you find this book a valuable resource in
your education and/or implementation of ERM. We welcome your comments and
suggestions. Answers to the end-of-chapter questions and detailed teaching notes
to most cases are available to instructors at www.wiley.com.
NOTES
1. See the 2014 American Productivity & Quality Center Report.
2. ISO 31000 was issued by the International Standards Organization in 2009. For a description refer to Chapter 7 of Fraser/Simkins by John Shortreed.
3. Fraser/Simkins, 15.
4. ISO 31000 has been agreed to by about 25 major countries of the international community
as the guideline for risk management.
REFERENCES
American Productivity & Quality Center (APQC). 2014. APQC Report. www.apqc.org/.
Fraser, John, and Betty J. Simkins, eds. 2010. Enterprise Risk Management: Todays Leading
Research and Best Practices for Tomorrows Executives. Hoboken, NJ: John Wiley & Sons.
Fraser, John, Karen Schoening-Thiessen, and Betty J. Simkins. 2008. Who Reads What Most
Often? A Survey of Enterprise Risk Management Literature Read by Risk Executives.
Journal of Applied Finance 18:1 (Spring/Summer).
PWC (PricewaterhouseCoopers). 2014. Risk in Review: Re-Evaluating How Your Company
Addresses Risk. www.pwc.com/us/en/risk-assurance-services/publications/risk-inreview-transformation-management.jhtml.
ABOUT THE EDITORS
John R.S. Fraseris the Senior Vice-President, Internal Audit, and former Chief Risk
Officer of Hydro One Networks Inc., Canada, one of North Americas largest electricity transmission and distribution companies. He is a Fellow of the Institute of
Chartered Accountants of Ontario, a Fellow of the Association of Chartered Certified Accountants (U.K.), a Certified Internal Auditor, and a Certified Information Systems Auditor. He has over 30 years of experience in the risk and control
field mostly in the financial services sector, including areas such as finance, fraud,
derivatives, safety, environmental, computers, and operations. He is a member
of the Faculty at the Directors College for the Strategic Risk Oversight Program,
and has developed and teaches a masters degree course entitled Enterprise Risk
www.it-ebooks.info
ENTERPRISE RISK MANAGEMENT CASE STUDIES 15
Management in the Masters in Financial Accountability Program at York University where he is an adjunct professor. He is a recognized authority on enterprise
risk management and has co-authored several academic papers on ERM. He is coeditor of a best-selling university textbook released in 2010, Enterprise Risk Management: Todays Leading Research and Best Practices for Tomorrows Executives.
Betty J. Simkins, PhD, is Williams Companies Chair of Business and Professor of
Finance at Oklahoma State University. Betty received her PhD from Case Western
Reserve University. She has had more than 50 publications in academic finance
journals. She has won awards for her teaching, research, and outreach, including
the top awards at Oklahoma States University: Regents Distinguished Research
Award and Outreach Excellence Award. Her primary areas of research are risk
management, energy finance, and corporate governance. Betty serves on the editorial boards of nine academic journals, including the Journal of Banking and Finance;
is past coeditor of the Journal of Applied Finance; and is past president of the Eastern Finance Association. She also serves on the Executive Advisory Committee of
the Conference Board of Canadas Strategic Risk Council. In addition to this book,
she has published two others: Energy Finance and Economics: Analysis and Valuation,
Risk Management and the Future of Energy and Enterprise Risk Management: Todays
Leading Research and Best Practices for Tomorrows Executives (co-edited with John
Fraser). Prior to entering academia, she worked in the corporate world for ConocoPhillips and Williams Companies. She conducts executive education courses for
companies globally.
Kristina Narvaez is the president and owner of ERM Strategies, LLC (www.ermstrategies.com), which offers ERM research and training to organizations on various ERM-related topics. She graduated from the University of Utah in environmental risk management and then received her MBA from Westminster College. She
is a two-time Spencer Education Foundation Graduate Scholar from the Risk and
Insurance Management Society and has published more than 25 articles relating
to enterprise risk management and board risk governance. She has given many
presentations to various risk management associations on topics of ERM. She is
an adjunct professor at Brigham Young University, teaching a business strategy
course for undergraduates.
www.it-ebooks.info
www.it-ebooks.info
PART I
Overview and Insights for
Teaching ERM
www.it-ebooks.info
www.it-ebooks.info
CHAPTER 2
An Innovative Method
to Teaching Enterprise
Risk Management
A Learner-Centered Teaching Approach
DAVID R. LANGE
Distinguished Research and Teaching Professor of Finance, Auburn University
Montgomery
BETTY J. SIMKINS
Williams Companies Chair of Business and Professor of Finance, Oklahoma State
University
Learner-centered teaching (LCT), commonly referred to as flipping the classroom (Shibley and Wilson 2012), is an alternative to the traditional teacher
lecture (TL). With LCT, students actively participate in the pedagogical process and take increased responsibility for learning through constructive reflective
reasoning. Where with TL content is covered, content in LCT is used as a means
to learning (Weimer 2002). LCT is ideally suited for content provided in lists,
tables, charts, and exhibits, and particularly so if these are in the form of topic
overviews, flowcharts, or summaries. The case method espouses similar studentengaged learning processes by promoting critical thinking and analysis, creating
discussion of conflicting issues and requiring a decision (Bean 2011). LCT amplifies and broadens student learning from cases. Hence, the case studies in this book
are ideal for teaching enterprise risk management (ERM) using LCT.
The chapter is presented in three sections. The first section clarifies the concept
of flipping the classroom with LCT, distinguishing LCT from a TL, and why the
growing LCT movement should be joined. The second section considers the
what, Weimers (2002) Learner Centered Teaching Five Key Changes to Practice, a
definitive paradigm for changing pedagogy to LCT from a TL. A final section, the
appendix, provides examples of how, using content to utilize LCT in an enterprise
risk management (ERM) course at Auburn University Montgomery. The examples
are from Enterprise Risk Management: Todays Leading Research and Best Practices
for Tomorrows Executives (Fraser and Simkins 2010), which opportunely provides
ERM content in the supporting formats. The LCT examples are provided in
19
www.it-ebooks.info
20 Implementing Enterprise Risk Management
Exhibit 2.1 TL versus LCT
Bloom (1956)
Anderson and Krathwohl
(2001) Expanded
Knowledge Comprehension Application Analysis Evaluation Synthesis
Remember: Recognize, recall Understand: Interpret, explain Apply: Calculate, solve Analyze: Distinguish, relate Evaluate: Critique, test Create: Hypothesize, devise
Memorize, recollect, retain Comprehend, realize, apprehend Compute, estimate, determine Examine, explore, study, associate Assess, appraise, review, comment Speculate, theorize, postulate, offer,
imagine, assume, suggest
contrast to TL approaches, and include learning notes expanding the how of
examples.
LEARNER-CENTERED TEACHING: THE WHY
Flipping the classroom refers to Blooms Cognitive Learning Taxonomy (1956), a
commonly accepted identification of levels of learning (Anderson and Krathwohl
2001; Bean 2011; Shibley and Wilson 2012), and thus an easily identifiable model
with which to distinguish LCT from TL. Exhibit 2.1 has inverted Blooms taxonomy to illustrate flipping the classroom. In a TL, the teacher normally progresses
through the taxonomy starting with imparting knowledge:
Knowledge: covering content with PowerPoint presentations, lecturers, and
so on
Comprehension: offering alternative descriptions and definitions, followed
by a question of What does this mean in your own words?
Application: , demonstrating necessary calculations, and solving homework problems replicating calculations
Analysis: comparing and explaining results from different problems
Evaluation: questioning validity of assumptions, processes, and textbook
sections on weaknesses in the model
Synthesis: concluding with summaries and overviews
We may recognize the TL approach from our own experience or through classroom observation of peers.
To further illustrate the levels of learning, Anderson and Krathwohls (2001)
revision of Blooms taxonomy is included in the center column of Exhibit 2.1.
The third column contains an expanded list of active learning for additional
clarification.
Learner-Centered Teaching
In LCT, content is used as a means to learning (Weimer 2002). Envision a learning
process in which students compute a financial problem, examine different points
of view, review and comment on an article, or postulate explanations for survey
www.it-ebooks.info


Get Professional Assignment Help Cheaply

Buy Custom Essay

Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?

Whichever your reason is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.

Why Choose Our Academic Writing Service?

  • Plagiarism free papers
  • Timely delivery
  • Any deadline
  • Skilled, Experienced Native English Writers
  • Subject-relevant academic writer
  • Adherence to paper instructions
  • Ability to tackle bulk assignments
  • Reasonable prices
  • 24/7 Customer Support
  • Get superb grades consistently

Online Academic Help With Different Subjects

Literature

Students barely have time to read. We got you! Have your literature essay or book review written without having the hassle of reading the book. You can get your literature paper custom-written for you by our literature specialists.

Finance

Do you struggle with finance? No need to torture yourself if finance is not your cup of tea. You can order your finance paper from our academic writing service and get 100% original work from competent finance experts.

Computer science

Computer science is a tough subject. Fortunately, our computer science experts are up to the match. No need to stress and have sleepless nights. Our academic writers will tackle all your computer science assignments and deliver them on time. Let us handle all your python, java, ruby, JavaScript, php , C+ assignments!

Psychology

While psychology may be an interesting subject, you may lack sufficient time to handle your assignments. Don’t despair; by using our academic writing service, you can be assured of perfect grades. Moreover, your grades will be consistent.

Engineering

Engineering is quite a demanding subject. Students face a lot of pressure and barely have enough time to do what they love to do. Our academic writing service got you covered! Our engineering specialists follow the paper instructions and ensure timely delivery of the paper.

Nursing

In the nursing course, you may have difficulties with literature reviews, annotated bibliographies, critical essays, and other assignments. Our nursing assignment writers will offer you professional nursing paper help at low prices.

Sociology

Truth be told, sociology papers can be quite exhausting. Our academic writing service relieves you of fatigue, pressure, and stress. You can relax and have peace of mind as our academic writers handle your sociology assignment.

Business

We take pride in having some of the best business writers in the industry. Our business writers have a lot of experience in the field. They are reliable, and you can be assured of a high-grade paper. They are able to handle business papers of any subject, length, deadline, and difficulty!

Statistics

We boast of having some of the most experienced statistics experts in the industry. Our statistics experts have diverse skills, expertise, and knowledge to handle any kind of assignment. They have access to all kinds of software to get your assignment done.

Law

Writing a law essay may prove to be an insurmountable obstacle, especially when you need to know the peculiarities of the legislative framework. Take advantage of our top-notch law specialists and get superb grades and 100% satisfaction.

What discipline/subjects do you deal in?

We have highlighted some of the most popular subjects we handle above. Those are just a tip of the iceberg. We deal in all academic disciplines since our writers are as diverse. They have been drawn from across all disciplines, and orders are assigned to those writers believed to be the best in the field. In a nutshell, there is no task we cannot handle; all you need to do is place your order with us. As long as your instructions are clear, just trust we shall deliver irrespective of the discipline.

Are your writers competent enough to handle my paper?

Our essay writers are graduates with bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college degree. All our academic writers have a minimum of two years of academic writing. We have a stringent recruitment process to ensure that we get only the most competent essay writers in the industry. We also ensure that the writers are handsomely compensated for their value. The majority of our writers are native English speakers. As such, the fluency of language and grammar is impeccable.

What if I don’t like the paper?

There is a very low likelihood that you won’t like the paper.

Reasons being:

  • When assigning your order, we match the paper’s discipline with the writer’s field/specialization. Since all our writers are graduates, we match the paper’s subject with the field the writer studied. For instance, if it’s a nursing paper, only a nursing graduate and writer will handle it. Furthermore, all our writers have academic writing experience and top-notch research skills.
  • We have a quality assurance that reviews the paper before it gets to you. As such, we ensure that you get a paper that meets the required standard and will most definitely make the grade.

In the event that you don’t like your paper:

  • The writer will revise the paper up to your pleasing. You have unlimited revisions. You simply need to highlight what specifically you don’t like about the paper, and the writer will make the amendments. The paper will be revised until you are satisfied. Revisions are free of charge
  • We will have a different writer write the paper from scratch.
  • Last resort, if the above does not work, we will refund your money.

Will the professor find out I didn’t write the paper myself?

Not at all. All papers are written from scratch. There is no way your tutor or instructor will realize that you did not write the paper yourself. In fact, we recommend using our assignment help services for consistent results.

What if the paper is plagiarized?

We check all papers for plagiarism before we submit them. We use powerful plagiarism checking software such as SafeAssign, LopesWrite, and Turnitin. We also upload the plagiarism report so that you can review it. We understand that plagiarism is academic suicide. We would not take the risk of submitting plagiarized work and jeopardize your academic journey. Furthermore, we do not sell or use prewritten papers, and each paper is written from scratch.

When will I get my paper?

You determine when you get the paper by setting the deadline when placing the order. All papers are delivered within the deadline. We are well aware that we operate in a time-sensitive industry. As such, we have laid out strategies to ensure that the client receives the paper on time and they never miss the deadline. We understand that papers that are submitted late have some points deducted. We do not want you to miss any points due to late submission. We work on beating deadlines by huge margins in order to ensure that you have ample time to review the paper before you submit it.

Will anyone find out that I used your services?

We have a privacy and confidentiality policy that guides our work. We NEVER share any customer information with third parties. Noone will ever know that you used our assignment help services. It’s only between you and us. We are bound by our policies to protect the customer’s identity and information. All your information, such as your names, phone number, email, order information, and so on, are protected. We have robust security systems that ensure that your data is protected. Hacking our systems is close to impossible, and it has never happened.

How our Assignment Help Service Works

1. Place an order

You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.

2. Pay for the order

Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.

3. Track the progress

You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.

4. Download the paper

The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.

smile and order essay GET A PERFECT SCORE!!! smile and order essay Buy Custom Essay


Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more
error: Content is protected !!
Open chat
1
Need assignment help? You can contact our live agent via WhatsApp using +1 718 717 2861

Feel free to ask questions, clarifications, or discounts available when placing an order.
  +1 718 717 2861           + 44 161 818 7126           [email protected]
  +1 718 717 2861         [email protected]