RM-4
Student 1:
Risk Management Framework
When coming to Blue Wood Chocolates Company, with both CEO and CRO the company CRO should interact because CEO will know everything about the business should such as company past activities and previous major key decisions that were made. Thus for an organization CFO is new and the CFO will be the part of the future business process and CFO also be interacted with the CRO. While the company implementing ERM then the CRO should lead the company process (Chu, 2017).
In Kilgore Custom Milling, with all the teams the CRO must have interacted because even Steve MacLinden is the CEO of this company and each department in this company will have their heads such as manufacturing, customer relationship, treasure, sales, etc. So with the team to mitigate risks the CRO should conduct common meetings. Among the management, cash flow concerns, there will be a lack of proper risk mitigation plans where there is clear visibility of the communication gap in both organizations (Hallowell, 2013).
In most of the small business organizations, the management of an organization will mostly make the business expansion and production key decisions. About product designing and business expansion this management has good knowledge but about the company risk mitigation techniques which include inflammation differences, issues related to cash flow, competitive threats, money management, and lawsuits for these the company will have minimal knowledge. In any organization when CRO is appointed then it will help the organization to bring an ownership order in the management and structure. Over the years the organization's responsibilities of CRO – Chief Risk Officer are evolving continuously. Some of the CRO functions include risk identification and plan to mitigate risks, between the teams of organization key decision making it forms good communication by conducting meetings and periodically updating the risk tolerance levels which indicates the CRO mandatory presence (Lundqvist, 2014).
References
Chu, C.-P., Hsiao, Y.-L., Cho, C.-M., & Chen, Y.-C. (Cindy). (2017). Applying compound options in logistics enterprise risk management. Journal of Industrial & Production Engineering, 34(2), 135–146. https://doi.org/10.1080/21681015.2016.1241307
Hallowell, M. R., Molenaar, K. R., & Fortunato, B. R. (2013). Enterprise Risk Management Strategies for State Departments of Transportation. Journal of Management in Engineering, 29(2), 114–121. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000136
Lundqvist, S. A. (2014). An Exploratory Study of Enterprise Risk Management: Pillars of ERM. Journal of Accounting, Auditing & Finance, 29(3), 393–429. https://doi.org/10.1177/0148558X14535780
Student 2:
HI Everyone,
Blue Wood chocolates has following risks. The past couple of years and quarterly results of the company showed a mixed financial performance that is fluctuating. There was no coordination across different departments like operations, sales and purchasing at Blue wood. To understand the reasons for the company’s failure there were no proper reports. There were no proper strategies for purchasing Coca and sugar. When compared with the competitors, Blue Wood's profit measures, gross margin was lower. And due to recent financial results, the board members never agreed on the objectives and business strategy. To solve these problems there should be an ERM framework. And as there is no enough time for the trials, no experienced people to implement and make the board understand about ERM, the Chief Risk Officer is needed at Blue Wood. keeping in mind the situation at Blue Wood chocolates, the CRO at Blue woods should report to the Sally (CFO) and closely work with the board to explain how the existing risks can be handled as they are the decision-makers.
And the following are the risks at Kilgore Custom Milling. Kilgore has already experienced losses when it supplied to US-based plants. With the new contract, Kilgore can get into losses if there are any risks in managing, producing and exchange rates. Kilgore also had a Cashflow problem. Th Cathy’s team doesn’t have answers to some of the questions and Steve was not happy with the Solutions or the options provided by Cathy’s team . Cathy also had various questions like products that would give them better exchange rate, How they can get the reports and how the analysis could help in ERM framework. To provide better options to Steve and answer the questions that Cathy has, a CRO should be appointed at Kilgore. Understanding the situations at Kilgore Custom Milling, the CRO should report to Steve (CEO) and closely work with Cathy(CFO) as She has a better understanding of the Financial situation at Kilgore and Cathy had some questions were she needed the answers. Reporting to CEO would allow CFO.
If the smaller companies don’t have a CRO dedicated with ERM than the Chief Financial Officer would be the better option to perform these duties. As the CFO’s have a very good understanding of the existing risks in the organization. At Blue Wood Chocolates Sally CFO was trying to implement the ISO 31000 ERM framework. But, due to lack of time she was not able to conduct the trials and difficulty in making the Board understand the ERM which made her drop the implementation of ERM.
Student 3:
Blue Wood chocolates carries out business internationally and domestically and has its factories located in western United States. The chief financial officer of Blue Wood realized of having high number of financial issues with the business and is responsible to lead the risk management framework. Additionally, Kilgore is a private manufacturer of automobile power window assemblies in Ontario, Canada. An operation manager is appointed to develop a risk management framework for Kilgore. Both the firms should appoint a Chief risk officer (CRO) which is dedicated towards managing risk of the companies.
The new Chief Risk Officer at Kilgore mining and Blue Wood Chocolates should report to the company’s chief executive officer (CEO). Such smaller firms should have their business backed up with insurance in case of any risks and they should also take care of company’s growth and competitiveness. Therefore, in case if these company’s fail to appoint a dedicated Chief Risk Officer (CRO) the insurance company would provide coverage for any services / infrastructure that was damaged. The board of directors aims to manage the risk function of a company and justifies the use of ERM in an organization. The board establishes whether a firm responds appropriately to the significant risks (Committee of Sponsoring Organizations of the Treadway Commission, 2009).
Reference
Committee of Sponsoring Organizations of the Treadway Commission. (2009). Documents. Retrieved
from COSO: https://www.coso.org/documents/COSOBoardsERM4pager-
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