Enterprsie Risk Management

ITS 835 Chapter 3

ERM at Mars, Incorporated: ERM for Strategy and Operations

Enterprise Risk Management

Dr. Les Stovall

Introduction

• Mars’ ERM history • Phase 1 – Crash and Burn • Phase 2 - Success

• Global rollout • Reporting • Operating workshops

• Technology • Aggregation • Template evolution

• Conclusion

Mars’ ERM History

• Mars, Incorporated • Privately held -> migration to non-family management

• Decentralized management

• Leadership had legacy commitment to risk management • ERM was viewed as an evolution

• COSO versus bespoke approach • COSO – Committee of Sponsoring Organizations structure • Bespoke approach won

• Phase 1 • Failed due to being impractical and overly complex

• Phase 2 • Simpler and targeted

Planning Workshops

• Desire to align senior management goals with ERM • Started with simple template

• Operating plan initiative sheet • Objective • Score • Risk column • Risk treatment column

• Management team met to define and rank • Risks • Risk treatments

• Changed label from “mitigations”

Global Rollout

• Used lessons learned from pilot • Each unit has specific nuances • Interviewing GM and CFO together saved subsequent

interview time

• Workshops helped to identify • Gaps in risk management readiness

• High-risk initiatives

• Ongoing activities with unexpected high risk

Reporting

• Color-coding adds • Urgency

• Clarity

• Groups are defined • Clusters

• Score represents • Confidence of meeting

goals

Reporting, cont’d.

Reporting, cont’d.

Reporting, cont’d.

Operating Workshops

• Several ongoing changes • Technology

• Early-on, process was technology agnostic

• Word -> Excel

• Excel -> purpose-built software

• ERM supports aggregation • More complete view of organizational impact of risk

• Continual template evolution • Added risk treatment owners and due dates

Summary

• Mars received an award for their ERM • Corporate Executive Boards’ “Force of Ideas Award” for ERM

• Key factors for ERM success • Alignment with Mars’ principles

• Focus on meeting objectives • Operational

• Strategic

• Flexible

• Realistic