Enterprise Risk Management

Description
  ● A thorough method to identify/address risks that could affect achievement of strategic objectives.
● Identifies both potentially harmful risks & risks to be exploited for some competitive advantage.
● Traditional risk management looks at risk on a “silo-based” or compartmentalized approach.
● Enterprise Risk Management looks at all risks on an “enterprise-wide” or a “holistic” basis.
● Allows you to compare risks whose effects may offset each other.
● Decreases the overall costs of managing an organization’s risks.
IBERM SOLUTIONS has the technical and business expertise to help your organization down the path toward reaping the benefits that inevitably come from managing your risks on an enterprise-wide basis. When decisions are needed regarding products/markets, investments/assets, capital management, or operations, managers must understand that these items are interrelated, making any decisions affecting them also interrelated.

In order to make decisions that take these interactions into account, executives must understand the interactions and the complete set of strategies available for overall enterprise risk management. IBERM SOLUTIONS can objectively assist management in sorting through the gamut of risks that could potentially affect their organizations and walk them through the possible solutions to the most pressing issues facing them.

Benefits of ERM
  ● Reduces earnings volatility, reducing the cost of capital and increasing firm value over time1.
● Companies with an Enterprise Risk Management program have 5% greater firm value2.
● Increased risk awareness by executives, possibly trickling down through the organization.
● More attention focused by senior management on risks with the biggest impact on earnings.
● More informed strategic and operational decisions regarding key issues.
● A stochastic financial model tying strategies to financial outcome, allowing “what-if” questions.
● Strategic planning includes all strategies (financial & operational) relevant to company objectives.
● Supplies management with immediate/effective responses to a variety of surprises and setbacks.
● Exploits areas previously unseen that might give the organization a competitive advantage.
● More efficient capital management, improving allocation to segments, unlocking hidden value.
● Encourages business segment managers to make decisions based on company wide information.
● Reassures stakeholders (regulators, owners,agencies, analysts...) the business is well managed.
● Assess the potential affect of a merger or acquisition on an organization’s overall risk profile.
● Incorporates risk-based measures into performance measurement.
● Blend risk assessment with the internal audit function, making the function more forward looking.

1. Miccolis, Jerry, and Shah, Samir, 2000, “Enterprise Risk Management” & “Risk Value Insights” Tillinghast – Towers Perrin Monographs
2. Allayannis, George, and James Weston, 2000, “The Use of Foreign Currency Derivatives and Firm Market Value,” Review of Financial Studies


General Risk Management Process
  ● Identify the risk appetite of the organization.
● Identify, assess, and prioritize all significant risks that could threaten the organization’s objectives.
● Model the effect of critical risks on financial performance indicators.
● Identify various strategies that can either be used to mitigate, avoid, or capitalize on these risks.
● Model various combinations of these risks to find the optimal capital allocation strategy.
● Develop a plan to implement the optimal strategy.
● Monitor progress and performance of the implemented plan for changes and strategy refinement.

IBERM SOLUTIONS can assist your organization in developing and implementing the risk management process that is best for you, regardless of your industry.

Types of Risks
  For the financial services industry, such as insurance or banking:
● Credit Risk, Market Risks, and Liquidity Risks
● Market risk includes interest rate, foreign exchange, sovereign, and commodity risks, among others.

Other risks that affect almost all industries, including but not limited to:
● Operational, business, regulatory, technical, system, management, reputation, and event risks.


Crisis Anticipation and Preparation
  ● Should be performed at every level, from company wide to department levels, and individually.
● Catastrophic events such as terrorism, scandals, and natural disasters, although rare, are possible.

“An ounce of prevention is worth a pound of cure.” There is no substitute for being prepared.
● Anticipation and preparation for crises rather than trying to manage them after they occur.
● Preparation for scenarios that otherwise could cause significant damage to your organization.
● Guidance you through finding ideas and alternative solutions to potential disruptions in operations.
● Identification of possible resources to fall back on during a crisis.

With a response plan in place BEFORE the crisis hits, you can feel confident that if a crisis does occur, it will have the least possible effect on your operations and financial results.

Compliance
  ● Be up to date with your internal controls & the corporate disclosure requirements of Sarbanes-Oxley.
● Don’t be caught off guard on privacy requirements of Graham-Leach-Bliley & HIPAA.



Continual Monitoring
  ● Our circumstances change continually, which means our risk environment also changes continually.
● Continual monitoring of the risk environment is critical to the success of risk management.
● it is critical in order to rebalance financial and operational risk strategies.
● Without it, the risk management program would become irrelevant in a relatively short period of time.


Risk Management Tools & Services Available at IBERM SOLUTIONS
  ● Risk and risk appetite identification and assessment, for all relevant risks.
● Assistance in identifying strategies to use as risk management solutions.
● Financial modeling of income drivers to show results with and without strategies.
● Optimization of use of capital resources towards risk management.
● Risk-adjusted performance measurement.
● Assistance to your organization in the design and implementation of a risk management program.
● Guidance through the crisis anticipation exercise.
● Recommendations of other possible solutions like hedging, benefits resources, insurance, etc.
● Design or analysis of self-insurance plans and options.



Home
Enterprise Risk Management
Leadership Development
Operations Consulting
Strategic Consulting
Actuarial Consulting
Ethics & Values
About Us
Contact Us
e-mail me

|Home| |Enterprise Risk Management| |Leadership Development| |Operations Consulting| |Strategic Consulting| |Actuarial Consulting| |Ethics & Values| |About Us| |Contact Us|