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Response 1:

I believe only a Chief Financial Officer is eligible to take a lead position and lead the entire process while designing and implementing a risk management framework in Blue Wood Chocolate Corporation whereas,  an operation manager can be suitable enough to handle an organize a risk assessment strategy framework in Kilgore Custom Million organization. Both these organizations should elect an individual chief risk-assessment officer and this person should be reporting their daily progress about their business operations to a Chief executive officer of their respective companies. Both the appointed personals should have complete access to the business operations and execution plans of their organizations’ enterprise risk management strategies and policies. The Kilgore Custom Milling corporation has been facing some serious issues regarding their new contracts in supply and the corresponding financial risks (Fraser, Simkins & Narvaez, 2014). After diligent discussing between the members of the board, the Kilgore custom management was able to finalize on introducing new supply plants into the United States, but it has resulted in almost bankruptcy of the company. This made the Kilgore custom management decided to opt for Canadian supplier’s for their standard prices and the quality of products that they have with other competitive manufactures. Small companies without much resources can take the help of insurance companies to sort out their risk management issues as they help in safeguarding the business policies of the company (Davis, 2019). For instance, basic policy insurances like minimal liability coverage can protect the company from various lawsuits categorized in employee’s honesty, equipment failure and some disasters that arise due to natural calamities (Zorz, 2014). The board of the organization always plays a key role in managing the risks in accordance with the risk criteria and so the high-level standards set by the members of the board management so that all the objective set by the higher management is achieved. For example, the Custom Million organization board can set certain measures to ensure that there is a low level of volatility is maintained and managed in terms of the company’s revenue and income. The board can better asses the existing risks and can monitor the performance of the business plans through some key performance indicators (Fraser, Simkins & Narvaez, 2014).

 

 

References:

Fraser, J., Simkins, B., & Narvaez, K. (2014). Implementing enterprise risk management: Case studies and best practices. John Wiley & Sons.

Zorz, M. (2014, May 28). Risk management issues, challenges, and tips. Retrieved October 16, 2019, from https://www.helpnetsecurity.com/2014/05/28/risk-management-issues-challenges-and-tips/.

Davis, M. (2019, September 2). Identifying and Managing Business Risks. Retrieved October 16, 2019, from https://www.investopedia.com/articles/financial-theory/09/risk-management-business.asp.

Response 2 :

Enterprise risk management is the most potent strategy that an organization can utilize to deal with numerous risks that range from strategic, market, credit, operational and financial exposure to a spectrum of human related and nature related calamities (Bunham 2004). An efficient risk management framework offers strategies for determine the operations of the organization to lower the instances of threats. Blue Wood chocolates and Kilgore Custom Milling should adopt risk management framework to improve their business operations (Lam 2016).

If Blue Wood chocolates  and Kilgore Custom Milling choose to adopt a risk management framework, the chief financial officer (CFO) should initiate the steps towards the building this phenomenon in their companies (Lam 2016). Provided the fact that CFO of an organization has all the relevant information in regard to the financial ability of that organization and take steps towards the adoption of risk management framework (Bromiley et al 2015).

It would be beneficial to appoint a chief risk officer (CRO) for Blue Wood chocolates and Kilgore Custom Milling. CRO will positively affect the organizational meaning of ERM and its internal trajectory.  As CROs play a different roles from risk management specialist in which they are not supposed to be experts in calculating the risks, but rather play role of advisors who could make the managers accountable for risks (Power, 2007). It was proven through numerous case studies that the CRO work in coordination with ERM, and would ultimately beneficial to an organization (Arena et al 2010).

The chief risk officer should report to the chief executive officer (CEO) and CFO.  CEO is the head of an organization and all the employees should report to CEO. As CFO has the command on all the financial matters of an organization, the CRO should have access to CFO too. Implementing a risk management framework needs a proper budgeting and CFO is the authority who can allot the funds within the organization (Bromiley et al 2015).

Smaller companies with limited resources should depend on CEO and CFO for compensating the role of CRO (Hopkin, 2018). As both of the above-mentioned authorities can predict the risks of the organization they can guide in developing the risk management framework (Bromiley et al 2015).

The board would play the role of auditing the efficacy of the developed risk management framework, will report to the CEO on the advances of the organization (Hopkin, 2018).  The board could govern the development process of the risk management framework.

 

References

Arena, M., Arnaboldi, M., Azzone, G. 2010. The organizational dynamics of enterprise risk management. Accounting, Organizations and Society. 35(7): 659-675

Bromiley, P., McShane, M., Nair, A., & Rustambekov, E. (2015). Enterprise risk management: Review, critique and research directions. Long range planning, 48 (4): 265-276

Bunham, R. 2004. Enterprising views of risk management. Journal of Accountancy. 1-9

Hopkin, P. (2018). Fundamentals of risk management: understanding, evaluating and implementing effective risk management. Kogan Page Publishers

Lam, J. 2014. Enterprise risk management: from incentive to controls. John Wiley & Sons.

Power, M. 2007. Organized uncertainty designing a world of risk management. Oxford university press on Demand.