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2556.202010 - FALL 2019 - ENTERPRISE RISK MANAGEMENT (ITS-835-01) - FIRST BI-TERM

Assignment #2 Vijay Krishna Kamma on Sun, Sep 15 2019, 8:15 PM

26% highest match Submission ID: b88f32bc-abf6-4ae8-a8ca-1e7f149b6485

Attachments (1)

Erm Assignmen 2.docx

Leveraging ERM to Practice Strategic Risk Management Case 2

Enterprise Risk Management Assignment#2 Leveraging ERM to Practice Strategic Risk

Management Case

Vijay Krishna Kamma

University of Cumberland’s

ERM and its Evolution

Over the last two decades, ERM has evolved from a concept of how risk should be addressed

or monitored to a methodology that is being implemented by modern management.

Enterprise risk management is a business strategy that aims at identifying, assessing, and

preparing for hazards and dangers that may interfere with the firm operation or objective. It

also makes the plan action available to all shareholders and investors. Organizations have

been managing risks for years (Dickinson, 2017). Traditionally a firm would decide to buy

insurance such as property insurance for damages that can be caused by fire, natural disaster

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Erm Assignmen 2.docx Word Count: 1,335 Attachment ID: 2121731426

26%

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as well as theft. Studying how organizations manage their risk plays an important role in

making investment decisions.

Today ERP systems are important for managing businesses of all industries and sizes.

Moreover, ERP has a huge impact on businesses: lowers operational cost, improves efficiency,

reduces risks, improves business insights, enhances collaboration, and lowers management

cost, (Nocco & Stulz, 2016). In order to reduce the risk a company is expected to define the

critical businesses processes, determine the threats that could affect the business, developing

a risk treatment plan, and evaluate the progress of the enterprise risk management program.

Employees or workers in all departments should be trained on the importance of enterprise

risk management. 1 AS ERM CONTINUES TO EVOLVE, THERE IS STILL SO

MUCH CONFUSION AND DISCUSSION OVER WHAT IT IS AND HOW IT CAN BE

ACHIEVED. IT IS IMPORTANT TO NOTE THAT IT IS STILL EVOLVING, AND IT

MAY TAKE YEARS BEFORE IT IS PRACTICED IN A CONSISTENT WAY.

Upside Gain and Downside Losses of Risk

I believe that risk has two faces the upside gain and the downside gain. The downside risk

refers to the requirements that are necessary to remain in business (Hoyt & Liebenberg,

2015). For example, not adhering to the laws and regulations, operation failure, or lack of

integrity in financial reports. Most of the companies take a traditional approach of risk

management which is mitigation. There are several downsides gain risk that may occur in the

business (Lam, 2016). For example, In India, public companies have to comply with labor

laws. Companies that perform all these tasks in a competent and timely way do not see their

share price surge as an outcome. These activities only meet the expectation of the shareholder,

supplier, and regulators. Upside risks, on the other hand, are risks that are taken by

companies to gain a competitive advantage.

The organization put their capital at risk. Upside risks include decisions that you make to

develop a new product, acquire a new company or enter a new market. The main aim of

upside risk is to create value. Focusing on one side will lead to one side outcome. Addressing

the downside risk and ignoring the upside risk can make the organization survive. However,

the company will never thrive (Olson & Wu, 2015). Companies that are more efficient and

effective in managing risk to both existing resources or assets and future growth will, in the

long run, outperform their competitors. Risk management is evolving from focusing on the

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downside of risk to a broader understanding that strategic decision can lead to both downside

and upside result.

ERM and its Value

Values are beliefs of what is good and bad in an organization. Value can be expressed through

performance, competency, quality, customer service, teamwork, and people satisfaction. In

my organization, value is measured through key performance indicators. One of the best ways

to create value is through investing in IT systems (Chapman, 2017). I believe that ERP adds

value to a business. A strong ERM can lead to better business decisions. That will lead to the

recognition of opportunities and avoiding issues resulting in a better business outcome.

Research shows that organizations with risk management process generate better financial

and business outcome as compared to those without, (John et al., 2015).

In order to ensure that ERP adds value, it is important to communicate strategic objectives

clearly. If the employees do not understand the goals and objectives of the organization, then

they will not be able to identify relevant risk and opportunities. Moreover, if the workers

understand the strategic objective, they will be able to act in a way that will add value to the

company. Keep the enterprise risk management program simple do not over complicate the

enterprise risk management programmers, (Barton, et al., 2017). A company should focus on

quality rather than quality. This will enable employees to understand the value that the

program adds, and it will also increase collaboration and participation, which will intern

increase the chances of success. Organizations that can successfully drive change in

organization culture drive massive benefits from the risk management programmed.

Integrating ERP into your business can improve the overall performance of the organization.

It can also help mitigate risks (Beasley, et al., 2015).

Tools and techniques to manage risk and make decisions

The methods of evaluating and managing risks will vary depending on the industry time and

the type of rules and regulations. Some of the tools and techniques that are used to manage

risk include risk ranking. Once a company has come up with a list of risk, they can start

ranking them. Ranking requires the team to prioritize the risk on a scale of more important,

less important, and moderate. When qualitatively accessing this risk, it is possible to estimate

the rang. For example, a low probability of customer-related risk can be estimated to be $50

million, a moderate probability can be estimated to be $25 million while a high probability

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can be estimated to have an impact of $10 million. Other techniques or tools used include

validation of risk impact, validation of correlation, validation of risk likelihood, scenario

analysis, gain, and loss curve, (Arena, et al., 2015).

2 GAIN AND LOSS CURVES ARE IMPORTANT TOOLS SINCE THEY HELP AN

ORGANIZATION SEE HOW THE RISK CAN INFLUENCE THE FINANCIAL

STATEMENT. A risk can either result in a gain or a loss. The curve shows the distribution of

potential loss and gain. However, it does not show a correlation between risks. In addition,

they do not show all the risks that are in place. 3 THE VERTICAL AXIS REPRESENTS

THE PROBABILITY WHILE THE HORIZONTAL AXIS REPRESENTS THE

DOLLAR. Knowing how big the impact of risk has can help the organization decide how

much money they can spend managing or mitigating the risk. Tornado chart shows how much

of an impact risk has on a certain metric such as revenue.

References:

Arena, M., Arnaboldi, M., & Azzone, G. (2015). 4 THE ORGANIZATIONAL DYNAMICS

OF ENTERPRISE RISK MANAGEMENT. Accounting, Organizations and Society, 35(7),

659-675.

Barton, T. L., Shenkir, W. G., & Walker, P. L. (2017). 4 MAKING ENTERPRISE RISK

MANAGEMENT PAY OFF. FT Press.

Beasley, M. 5 S., CLUNE, R., & HERMANSON, D. R. (2015). 4 ENTERPRISE RISK

MANAGEMENT: 5 AN EMPIRICAL ANALYSIS OF FACTORS ASSOCIATED

WITH THE EXTENT OF IMPLEMENTATION. Journal of accounting and public policy,

24(6), 521-531.

Chapman, R. J. (2017). 6 SIMPLE TOOLS AND TECHNIQUES FOR ENTERPRISE

RISK MANAGEMENT (VOL. 553). 7 JOHN WILEY & SONS.

Dickinson, G. (2017). 4 ENTERPRISE RISK MANAGEMENT: Its origins and

conceptual foundation. The Geneva Papers on Risk and Insurance. Issues and Practice, 26(3),

360-366.

Hoyt, R. E., & Liebenberg, A. P. (2015). 4 THE VALUE OF ENTERPRISE RISK

MANAGEMENT. Journal of risk and insurance, 78(4), 795-822.

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John R.S., Betty J.S. & Kristina. N. (2015). 6 IMPLEMENTING ENTERPRISE RISK

MANAGEMENT. 8 CASE STUDY AND BEST PRACTICES. 9 RETRIEVED FROM

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BVGZRCKFVZWHZLW?PROJECTOR=1&MESSAGEPARTID=0.1

Lam, J. (2016). 4 ENTERPRISE RISK MANAGEMENT: 10 FROM INCENTIVES TO

CONTROLS. 7 JOHN WILEY & SONS.

Nocco, B. W., & Stulz, R. M. (2016). 4 ENTERPRISE RISK MANAGEMENT: 11

THEORY AND PRACTICE. Journal of applied corporate finance, 18(4), 8-20.

Olson, D. L., & Wu, D. D. (2015). 4 ENTERPRISE RISK MANAGEMENT (VOL. 3). 7

WORLD SCIENTIFIC PUBLISHING COMPANY.

Citations (11/11)

Matched Text

1 Another student's paper

2 Another student's paper

3 Another student's paper

4 https://blog.soa.org/2017/09/07/erm-lessons-from-the-masters-the-canadian-perspective/

5 Another student's paper

6 Another student's paper

7 https://risikoledelse.com/2016/02/

8 Another student's paper

9 Another student's paper

10 http://talya-shop.ru/matt-sekerke-bayesian-risk-management-a/

11 ProQuest Document

Suspected Entry: 90% match

9/15/2019 SafeAssign Originality Report

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Uploaded - Erm Assignmen 2.docx AS ERM CONTINUES TO EVOLVE, THERE IS STILL SO MUCH CONFUSION AND DISCUSSION OVER WHAT IT IS AND HOW IT CAN BE ACHIEVED

Source - Another student's paper As ERM continues to evolve there is still much discussion and confusion over exactly what it is and how it should be achieved

Suspected Entry: 81% match

Uploaded - Erm Assignmen 2.docx IT IS IMPORTANT TO NOTE THAT IT IS STILL EVOLVING, AND IT MAY TAKE YEARS BEFORE IT IS PRACTICED IN A CONSISTENT WAY

Source - Another student's paper It is important to realize that it is still evolving and may take many more years before it is fully codified and practiced in a consistent way

Suspected Entry: 72% match

Uploaded - Erm Assignmen 2.docx GAIN AND LOSS CURVES ARE IMPORTANT TOOLS SINCE THEY HELP AN ORGANIZATION SEE HOW THE RISK CAN INFLUENCE THE FINANCIAL STATEMENT

Source - Another student's paper · Gain/loss curves are useful tools because they help an organization see how a risk can influence its financial statements and result in a gain or a loss

Suspected Entry: 78% match

Uploaded - Erm Assignmen 2.docx THE VERTICAL AXIS REPRESENTS THE PROBABILITY WHILE THE HORIZONTAL AXIS REPRESENTS THE DOLLAR

Source - Another student's paper The vertical axis represents the probability, and horizontal axis represents the percentage of the students

Suspected Entry: 67% match

Uploaded - Erm Assignmen 2.docx THE ORGANIZATIONAL DYNAMICS OF ENTERPRISE RISK MANAGEMENT

Source - https://blog.soa.org/2017/09/07/erm- lessons-from-the-masters-the-canadian-perspective/

Enterprise risk management

Suspected Entry: 67% match

Uploaded - Erm Assignmen 2.docx Source - https://blog.soa.org/2017/09/07/erm- lessons-from-the-masters-the-canadian-perspective/

9/15/2019 SafeAssign Originality Report

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MAKING ENTERPRISE RISK MANAGEMENT PAY OFF

Enterprise risk management

Suspected Entry: 100% match

Uploaded - Erm Assignmen 2.docx ENTERPRISE RISK MANAGEMENT

Source - https://blog.soa.org/2017/09/07/erm- lessons-from-the-masters-the-canadian-perspective/

Enterprise risk management

Suspected Entry: 100% match

Uploaded - Erm Assignmen 2.docx ENTERPRISE RISK MANAGEMENT

Source - https://blog.soa.org/2017/09/07/erm- lessons-from-the-masters-the-canadian-perspective/

Enterprise risk management

Suspected Entry: 82% match

Uploaded - Erm Assignmen 2.docx THE VALUE OF ENTERPRISE RISK MANAGEMENT

Source - https://blog.soa.org/2017/09/07/erm- lessons-from-the-masters-the-canadian-perspective/

Enterprise risk management

Suspected Entry: 100% match

Uploaded - Erm Assignmen 2.docx ENTERPRISE RISK MANAGEMENT

Source - https://blog.soa.org/2017/09/07/erm- lessons-from-the-masters-the-canadian-perspective/

Enterprise risk management

Suspected Entry: 100% match

Uploaded - Erm Assignmen 2.docx ENTERPRISE RISK MANAGEMENT

Source - https://blog.soa.org/2017/09/07/erm- lessons-from-the-masters-the-canadian-perspective/

Enterprise risk management

Suspected Entry: 83% match

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ENTERPRISE RISK MANAGEMENT (VOL Enterprise risk management

Suspected Entry: 100% match

Uploaded - Erm Assignmen 2.docx S., CLUNE, R., & HERMANSON, D

Source - Another student's paper S., Clune, R., & Hermanson, D

Suspected Entry: 84% match

Uploaded - Erm Assignmen 2.docx AN EMPIRICAL ANALYSIS OF FACTORS ASSOCIATED WITH THE EXTENT OF IMPLEMENTATION

Source - Another student's paper An empirical analysis of factors associated with the extent of implementation by Beasley, M

Suspected Entry: 100% match

Uploaded - Erm Assignmen 2.docx SIMPLE TOOLS AND TECHNIQUES FOR ENTERPRISE RISK MANAGEMENT (VOL

Source - Another student's paper Simple tools and techniques for enterprise risk management (Vol

Suspected Entry: 100% match

Uploaded - Erm Assignmen 2.docx IMPLEMENTING ENTERPRISE RISK MANAGEMENT

Source - Another student's paper Implementing Enterprise Risk Management

Suspected Entry: 100% match

Uploaded - Erm Assignmen 2.docx JOHN WILEY & SONS

Source - https://risikoledelse.com/2016/02/ John Wiley & Sons,

Suspected Entry: 100% match

Uploaded - Erm Assignmen 2.docx JOHN WILEY & SONS

Source - https://risikoledelse.com/2016/02/ John Wiley & Sons,

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Suspected Entry: 83% match

Uploaded - Erm Assignmen 2.docx WORLD SCIENTIFIC PUBLISHING COMPANY

Source - https://risikoledelse.com/2016/02/ World Scientific Publishing Company, ISBN

Suspected Entry: 73% match

Uploaded - Erm Assignmen 2.docx CASE STUDY AND BEST PRACTICES

Source - Another student's paper Case Studies and Best Practices

Suspected Entry: 92% match

Uploaded - Erm Assignmen 2.docx RETRIEVED FROM HTTPS://MAIL.GOOGLE.COM/MAIL/U/0/#INBOX/F MFCGXWDRHLTGVWRVBVGZRCKFVZWHZLW? PROJECTOR=1&MESSAGEPARTID=0.1

Source - Another student's paper Retrieved from https://mail.google.com/mail/u/0/#inbox/FMfcgxwDqT hrXwpvvGkXsRLcGdlPRrxM? projector=1&messagePartId=0.1

Suspected Entry: 99% match

Uploaded - Erm Assignmen 2.docx FROM INCENTIVES TO CONTROLS

Source - http://talya-shop.ru/matt-sekerke-bayesian- risk-management-a/

From Incentives to Controls

Suspected Entry: 100% match

Uploaded - Erm Assignmen 2.docx THEORY AND PRACTICE

Source - ProQuest Document Theory and Practice