Week13_Journal_ERM
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Chapter47Slides.pptxITS835 enterprise risk management Chapter 4 & 7
ERM at statoil and united grain growers
1
University of Cumberlands
Introduction
History of Statoil
ERM at Statoil
United Grain Growers Background
ERM at Grain Growers
Conclusion
2
University of Cumberlands
Statoil History
Headquartered in Stavanger, Norway
World’s top 10 oil and gas producers
706 billion in revenue
23,000 employees
2,004 million barrels of oil
40 year history of producing oil
3
University of Cumberlands
Erm at statoil
Goals: create value and avoid accidents
Wanted a way to manage risks
Recognize risk taking is unavoidable even necessary to create value for shareholders
Risk Map
Upside potential and downside risk for a risk factor
Reported risks are listed twice
Value Creation is the guiding principle for an ERM
Viewing risks in a value chain
Value Chain has 3 main stages
Exploration and development of oil and gas reserves
Refinement of hydrocarbons into various gas products
Selling of gas, oil and products into different markets
Risks divided into 2 categories: market and operational risks
ERM Processes
Quarterly rhythm with meetings
Write response to business units
Risk department is supervisor of the risk mapping process
Support business and encourages best practices
Risk mapping, quantification of probability and impact considered
4
University of Cumberlands
Total risk optimization: lessons learned
Tacked the task of avoiding risk management decisions that are suboptimal for the company.
Established KPIs and scorecards
Spent time on beforehand thinking about what ERM should look like
Risk Committee Roles and Responsibilities
5
University of Cumberlands
conclusion
Evolution of ERM over time based on organizational goals and values
ERM Processes to minimize risks and optimize it
Consider upside and downside potential risk during assessment exercise
ERM to increase organizational performance
6
University of Cumberlands
United grain growers overview
Commodity traded company
Focused on grain grown in Canadian
Factors the impact operations
Government regulation
Political risk
Governance
7
University of Cumberlands
UGG Leadership
Structure
CEO
Board of Directors
1906 Farmed-owned cooperative
Bureaucratic business model
Early 1990s suffered financial distressed
Breach of bank covenants and losing cash
CEO suggested drastic changes to help increase operational and financial performance
8
University of Cumberlands
Ugg erm process
Identify and access principle risks
ERM exercise to identify risks
Two approaches to address problems
Developed Strategic Plan to improve financial dividends and balance sheet numbers
Credit Financial Outcomes
Merger with Agricore United through risk financing program
9
University of Cumberlands
conclusion
ERM Usage to help with Financial Risk
Outcomes of using ERM
Leadership Changes due to ERM
10
University of Cumberlands
