2 Discussion topics
week 1/Chapter 3.pdf
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
week 1/Chapter 5.pdf
ITS 835 Chapter 5
ERM in Practice at the University of California Health System
Enterprise Risk Management
Dr. Les Stovall
Introduction
• University of California’s ERM • Technology • Premium rebate program
• Professional Liability Prescription Program (PLPP)
• ERM and the Center for Health Quality and Innovation
• Protected health information value estimator • PHIve
University of California’s ERM
• University of California (UC) Health System • Clinics, medical centers, schools • Over 3 million patient visits annually
• UC Office of the President’s Office of Risk Services • Responsible for ERM
• UC formally adopted COSO Integrated Framework in 1995 • Committee of Sponsoring Organizations Internal Control
• Newly hired Chief Risk Officer (CRO) • Experienced in ERM from industry
• Key Performance Indicator (KPI) • Critical to ERM foundation
Technology
• UC’s approach incorporates technology • ERM information system (ERMIS)
• Initial phases • Simple risk assessment tools
• Dashboards
• Control, mitigation, monitoring, survey
• Dashboard system • Based on KPIs
• Visual indicators
ERM Process
ERMIS Dashboards
UC MMR (My Managed Risk) Portal
UC’s Approach to Evaluating Incidents, Events, and Claims
Premium Rebate Program
• Program to reduce frequency and severity of loss • Professional Liability Prescription Program (PLPP)
• Encourage risk reduction initiatives • Aimed at reducing cost of risk
• Rewards units for implementing effective initiatives • Annual rebates for initiatives that work • Driving concept - Everyone is a risk manager
• ERM and the Center for Health Quality and Innovation • Joint venture to award up to $8 million • Reduce risk of clinical harm to UC surgery patients
PHIve
• Personal health information (PHI) • UC asked Bickmore to develop a software tool
• Estimates the value of PHI • PHI value estimator (PHIve)
• PHIve steps • Process determines the impact of PHI breach
• Repercussions • Reputational • Financial • Legal and regulatory • Operational • Clinical
Summary
• Risk is a part of all organizations • ERM assists organizations in managing all risk • UC deliberately advanced ERM to reduce overall risk • UC Office of Risk management updates risk plans in an
ongoing effort
• Technology is a cornerstone of UC’s ERM
week 1/Instructions week 1.docx
Chapter 3 presented the approach Mars, Incorporated used to implement ERM, and chapter 5 presented the University of California Health System’s ERM development. In what ways are the two organization’s approaches to ERM similar? How do they differ? Choose one aspect of each ERM implementation from which the other organization would benefit and explain why.
To complete this assignment, you must do the following:
A) As indicated above, describe in what ways the two organization’s approaches to ERM are similar. Also, explain how they differ. Choose one aspect of each ERM implementation from which the other organization would benefit and explain why.