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DISCUSSION -1
RE: Chapter 5: ERM in Practice at the University of California Health System
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1.Explain how improvement is measured with KPIs and give one example related to human capital and how this KPI might help you improve your organization?
As business risks continue to increase, organizations are finding it necessary to implement some sort of formal risk management system. Here it helps organizations manage their risks and maximize opportunities. Organizations in all types of industries, public and private, have observed a variety of benefits from enhancing their risk management programs.
What is ERM?
A committee of five organizations dedicated to thought leadership around risk management provided a definition of ERM in 2004. ERM is a way to effectively manage risk across the organization using a common risk management framework. This framework can vary widely among organizations but typically involves people, rules, and tools. This means individuals with defined responsibilities use established, repeatable processes. Many organizations struggle with implementing ERM and identifying how, and at what level, to integrate it into their organization. Managers often say they are already aware of the risks for their respective areas of the business.
2. What do you think is the difference between the traditional Risk management and Enterprise Risk management?
Traditional Risk Management:
Business leaders manage risks and they have done so for decades. Thus, calls for enterprise risk management aren’t suggesting that organizations haven’t been managing risks. Instead, proponents of ERM are suggesting that there may be benefits from thinking differently about how the enterprise manages risks affecting the business. Traditionally, organizations manage risks by placing responsibilities on business unit leaders to manage risks within their areas of responsibility. For example, the Chief Technology Officer (CTO) is responsible for managing risks related to the organization’s information technology (IT) operations, the Treasurer is responsible for managing risks related to financing and cash flow, the Chief Operating Officer is responsible for managing production and distribution, and the Chief Marketing Officer is responsible for sales and customer relationships, and so on.
Risk management:
the concept of enterprise risk management as a way to strengthen their organization’s risk oversight. They have realized that waiting until the risk event occurs is too late for effectively addressing significant risks and they have proactively embraced ERM as a business process to enhance how they manage risks to the enterprise. The objective of enterprise risk management is to develop a holistic, portfolio view of the most significant risks to the achievement of the entity’s most important objectives. The “e” in ERM signals that ERM seeks to create a top-down, enterprise view of all the significant risks that might impact the business.
The goal of ERM is to create this top-down, enterprise view of risks to the entity, responsibility for setting the tone and leadership for ERM resides with executive management and the board of directors. They are the ones who have the enterprise view of the organization and they are viewed as being ultimately responsible for understanding, managing, and monitoring the most significant risks affecting the enterprise.
References
Jim Kreiser (October , 2013 ) Benefits of enterprise risk management ERM retrieved https://www.claconnect.com/resources/articles/five-benefits-of-enterprise-risk-management
Mark S. Beasley (2016) What is Enterprise Risk Management? Retrieved https://erm.ncsu.edu/az/erm/i/chan/library/What_is_Enterprise_Risk_Management.pdf
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RE: Chapter 5: ERM in Practice at the University of California Health System
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Question 1: Explain how improvement is measured with KPIs and give one example related to Human Capital and how this KPI might help you improve your organization.
The key performance indicator is a critical factor when it comes to businesses and their employee well-being. This key performance indicator can be improved by ensuring that that records are taken precisely at the time they risks occur as well as the risk. This will enable the KPI to be measured by looking at the time periods relative to the risk hence the improvement is measured. By this we are able to determine the recordable rate by determining the number of injuries comparative to the number of hours that the employees work.
Question 2: What do you think is the difference between traditional risk management and enterprise risk management?
I don’t think there is a difference between traditional risk management and enterprise risk management. The reason behind my decision is because these two are more same than slightly different. Whatever is composed in the enterprise risk management is more or less what is composed in the traditional risk management and therefore there is no way they are termed as different.
Reference:
Fraser, J., Simkins, B., & Narvaez, K. (2015). Implementing enterprise risk management. Hoboken: Wiley.
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Discussion -3
RE: Chapter 3: ERM at Mars, Incorporated: ERM for Strategy and Operations
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What represents the key success factors of the program?
The first and the important factor that led to success of ERM program at MARS is the management’s dedicated towards implementing the ERM followed by choosing the right vendor to implement the ERM practices. The team successfully conducted the surveys, assessment workshops among different product groups across the globe which helped them with requirement gathering and to analyze the gap (risks) that needs to be addressed. The team was very efficient in identifying company’s strength and leveraging them and were quick in delivering the ERM strategies within the project timeline. The ERM team was always committed to learn new risks and come up with the mitigation strategy.
What improvements would you make?
ERM uses different tools and approach. Mars approach to gathering requirement was done through series of surveys, interviews and analysis based on past records. The company initially relied on word and excel for documenting the requirements. Instead if the company deployed complementary tools (Delphi methodology or war-gaming exercise), it could help the enterprise in much more thorough modeling.
Does this represent an effective risk management program? If not, what is missing?
Overall, it is an effective strategy but I think the organization lacks better tools that will complement the ERM process.
References:
ERM Implementation at Leading Organizations. (n.d.). Retrieved from
https://ebrary.net/9794/management/erm_implementation_leading_organizations
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Discussion – 4
RE: Chapter 3: ERM at Mars, Incorporated: ERM for Strategy and Operations
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What represents the key success factors of the program?
ERM will have many factors that will contribute for the success of an organization. Key factors for success of ERM at MARS are the way the requirements are prioritized with business principles. Development of the ERM was completely based upon the feedback’s, surveys and workshops which provided a good platform for the development. Having work locations in different geographical area’s helped to gather different inputs and key factors for the decision making on how ERM should be implemented.
What represents the key success factors of the program?
While developing a ERM for an organization I would consider lot of factors to put up the plan for a good ERM model. I will organize sessions with all the level of people in an organization to gather business knowledge on how and what are the key factors contributing for the business. Once the plan is put up I would involve all the team’s in the business. Subject matters experts will be heavily involved once the development and testing phases begin for the ERM. I will get in touch with the end user on timely basis to make sure the development is going on as per the plan.
What represents the key success factors of the program?
Key success factors for an ERM implementation include lot of factors at each level of development.
Strategies followed for the development of the ERM
· Identifying the technology and skills with an organization for the ERM development.
· Implementing the ERM with the help of good implementation partners if in house skill is not available.
· Active involvement of the SME in various phases of ERM implementation.
· Drafting a flexible plan to make sure the plan can be modifies if any road block comes in during the development.
· Implementing the ERM with the budget would be a key factor financially.
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