Implementing Enterprise Risk Management: Case Studies and Best Practices

690 Pages·2014·8.58 MB·English

by  John Fraser

AdditionalPraisefor
ImplementingEnterpriseRiskManagement
“Educatorstheworldoverseekingtomakethemanagementofriskanintegralpart
ofmanagementdegreeshavehadgreatdifficultiesinprovidingtheirstudentswith
adefinitiveERMtextfortheircourse.TheStandardsandassociatedHandbooks
helped,butuntilthearrivalofImplementingEnterpriseRiskManagement:CaseStud-
iesandBestPractices,therehasbeennotexttoenlightenstudentsontheapplication
ofaneffectiveprogramtomanageriskacrossanenterprisesothatobjectivesare
maximizedandthreatsminimized.Fraser,Simkins,andNarvaezhavecombined
withagroupofcontributorsthatrepresentthecreamofriskpractitioners,topro-
videthereaderwithaclearandconcisejourneythroughthemanagementofrisk
withinawiderangeoforganizationsandindustries.Theknowledge,skills,and
experienceinthemanagementofriskcontainedwithinthecoversofthisbookare
secondtonone.Itwillprovideamuchneededresourcetostudentsandpractition-
ersformanyyearstocomeandshouldbecomeawell-usedreferenceonthedesk
ofeverymanagerofrisk.”
—KevinW.KnightAM,chairman,ISO/TC262—RiskManagement
“Theauthors—Fraser,Simkins,andNarvaez—havedoneaninvaluableserviceto
advancethescienceofenterpriseriskmanagementbycollectinganextensivenum-
berofwonderfulcasestudiesthatdescribeinnovativeriskmanagementpractices
inadiversesetofcompaniesaroundtheworld.Thisbookshouldbeanextremely
valuablesourceofknowledgeforanyoneinterestedintheemergingandevolving
fieldofriskmanagement.”
—RobertS.Kaplan,seniorfellow,MarvinBowerProfessorofLeadership
Development,emeritus,HarvardUniversity
“Lessonslearnedfromcasestudiesandbestpracticesrepresentanefficientway
togainpracticalinsightsontheimplementationofERM.ImplementingEnterprise
Risk Management provides such insights from a robust collection of ERM pro-
gramsacrosspubliccompaniesandprivateorganizations.Icommendtheeditors
and contributors for making a significant contribution to ERM by sharing their
experiences.”
—JamesLam,president,JamesLam&Associates;directorandRiskOversight
Committeechairman,E∗TRADEFinancialCorporation;
author,EnterpriseRiskManagement—FromIncentivestoControls
“Forthosewhostillthinkthatenterpriseriskmanagementisjustafad,thevaried
examplesofpracticalvalue-generatingusescontainedinthisbookshoulddispel
anydoubtthatthedisciplineisheretostay!Thebroadcollectionofpractices is
insightfulforstudents,academics,andexecutives,aswellasseasonedriskman-
agementprofessionals.”
—CarolFox,ARM,directorofStrategicandEnterpriseRiskPractice,RIMS
“Managingriskacrosstheenterpriseisthenewfrontierofbusinessmanagement.
Doingsoeffectively,inmyview,willbethesinglemostimportantdifferentiating
factorformanyenterprisesinthetwenty-firstcentury.ImplementingEnterpriseRisk
Management:CaseStudiesandBestPracticesisaninnovativeandimportantaddition
totheliteratureandcontainsawealthofinsightinthiscriticalarea.Thisbook’s
integration of theory with hands-on, real-world lessons in managing enterprise
riskprovidesanopportunityforitsreaderstogaininsightandunderstandingthat
couldotherwisebeacquiredonlythroughmanyyearsofhard-earnedexperience.
Ihighlyrecommendthisbookforusebyexecutives,linemanagers,riskmanagers,
andbusinessstudentsalike.”
—DouglasF.Prawitt,professorofAccountingatBrighamYoungUniversity,
andCommitteeofSponsoringOrganizations(COSO)
ExecutiveBoardmember
“The real beauty of and value in this book is its case study focus and the wide
varietyoffirmsprofiledandwriters’perspectivesshared.Thiswillprovidereaders
withawealthofdetailsandviewsthatwillhelpthemchartanERMjourneyoftheir
ownthatismorelikelytofitthespecificandtypicallycustomizedERMneedsof
thefirmsforwhomtheytoil.”
—ChrisMandel,seniorvicepresident,StrategicSolutionsforSedgwick;
formerpresidentoftheRiskManagementSociety
andthe2004RiskManageroftheYear
“ImplementingEnterpriseRiskManagementlooksatmanyindustriesthroughexcel-
lent case studies, providing a real-world base for its recommendations and an
importantreminderthatERMisvaluableinmanyindustries.Ihighlyrecommend
thistext.”
—RussellWalker,Clinicalassociateprofessor,KelloggSchoolofManagement;
authorofWinningwithRiskManagement
“ThebodyofknowledgeinImplementingEnterpriseRiskManagementcontinuesto
developasbusinesseducatorsandleadersconfrontacomplexandrapidlychang-
ingenvironment.Thisbookprovidesavaluableresourceforacademicsandprac-
titionersinthisdynamicarea.”
—MarkL.Frigo,director,StrategicRiskManagementLab,
KellstadtGraduateSchoolofBusiness,DePaulUniversity
“Themanagementofenterpriseriskisoneofthemostvexatiousproblemscon-
frontingboardsandexecutivesworldwide.ThisiswhythislatestbookbyFraser,
Simkins,andNarvaezisamuchneededandhighlyrefreshingapproachtothesub-
ject.Theeditorshavemanagedtoassembleanimpressivelistofcontributorswho,
throughaseriesoffascinatingreal-lifecasestudies,adroitlyhelpeducatereaders
tobetterunderstandanddealwiththemyriadofrisksthatcanassault,seriously
maim,and/orkillanorganization.Thisisa‘howto’bookwrittenwiththe‘risk
managementproblemsolver’inmind.Itprovidesthelinkthathasbeenmissing
foreffectivelyteachingERMattheuniversityandexecutiveeducationlevelsand
itisanexceptionalachievementbytrueriskmanagementadvocates.”
—Dr.ChrisBart,FCPA,founderandleadfaculty,
TheDirectorsCollegeofCanada
“TheInstituteofRiskManagementwelcomesthepublicationofthishighlypracti-
caltextwhichshouldbeofgreatinteresttoourstudentsandmembersaroundthe
world.ImplementingEnterpriseRiskManagementbringstogetherafinecollectionof
detailedcasestudiesfromorganizationsofvaryingsizes andworkingindiffer-
entsectors,allseekingtoenhancetheirbusinessperformancebymanagingtheir
risksmoreeffectively,fromtheboardroomtotheshopfloor.Thisbookmakesa
valuablecontributiontothebodyofknowledgeofwhatworksthatwillbenefitthe
developmentoftheriskprofession.”
—CarolynWilliams,technicaldirector,InstituteofRiskManagement
IMPLEMENTING
ENTERPRISE RISK
MANAGEMENT
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
approximately65volumescoveringallmajortopicsandspecializationsinfinance,
rangingfrominvestments,tocorporatefinance,tofinancialinstitutions.Eachvol-
ume in the Kolb Series in Finance consists of new articles especially written for
thevolume.
Eachvolumeiseditedbyaspecialistinaparticularareaoffinance,whodevelops
thevolumeoutlineandcommissionsarticlesbytheworld’sexpertsinthatpartic-
ular field of finance. Each volume includes an editor’s introduction and approx-
imately thirty articles to fully describe the current state of financial research and
practiceinaparticularareaoffinance.
Theessaysineachvolumeareintendedforpracticingfinanceprofessionals,grad-
uatestudents,andadvancedundergraduatestudents.Thegoalofeachvolumeis
toencapsulatethecurrentstateofknowledgeinaparticularareaoffinancesothat
thereadercanquicklyachieveamasteryofthatspecialareaoffinance.
IMPLEMENTING
ENTERPRISE RISK
MANAGEMENT
Case Studies and Best Practices
Editors
John R.S. Fraser
Betty J. Simkins
Kristina Narvaez
TheRobertW.KolbSeriesinFinance
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10 9 8 7 6 5 4 3 2 1
To Wendy, my wonderful wife and my inspiration, and to my
parentswhoinstilledinmealifelongthirstfor learning.
—John Fraser
To my husband (Russell) and our family: sons and daughters-
in-law (Luke & Stephanie and Walt & Lauren), daughter and
son-in-law(Susan&Jason),andouryoungestdaughter(April).
Thankyoufor yourlove,support, andencouragement!
—BettySimkins
Iwouldliketothankmyhusbandandfourchildrenforsupport-
ingmeonmyjourneyofwritingtwochaptersandco-editingthis
book.IwouldalsoliketothanktheRiskandInsuranceManage-
ment Society for supporting me during my educational years
and providing great workshops and conferences on enterprise
riskmanagement.
—KristinaNarvaez