After reading Chapter 34: Turning Crisis into Opportunity, answer the question below. Make sure you write a detailed explanation and include an example. Use APA style for any outside sources.
Question: Do you think that companies need to experience a crisis to take risk seriously?
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Chapter 34
Miscellaneous Case Study on ERM and RIsk
Enterprise Risk Management
Overview
One case studies
Building an ERM Program at General Motors
scenario of the organization
Useful in examining broader implications
Look for similarities with other 0rganizations studied
Each case is unique and special
Each is special on how they address Enterprise Risk.
Make sure to realize similarities within these organizations , not only the differences.
We are going to spend more time in the last case by General Motors
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Building an ERM Program at General Motors
Background
GM approach to ERM
Game theory
Looking forward
ERM at GM Background
ERM program began in 2010
ERM to help achieve competitive advantage
New CEO
GM bankruptcy in 2009
Chief Risk Officer (CRO) appointed
Financial and Risk Policy Committee formed
CRO assigned Risk officers identified and aligned to all CEO direct reports. Risk process distributed evenly by functional area.
GM embraced aggressive ERM
GM Approach to ERM
ERM built on GM’s vision
Design, build, and sell the world’s best vehicles
Identify and manage key risks
Bottom-up approach
Focus on “what can go right”
Positive and Negative risk / uncertainty.
Lessons learned
Gave responsibility of assessing risk probability and impact to senior executives
Replaced ranked risk (time consuming and ineffective) list with tiered list
Implemented a 5 point scale to measure
Inherent risk
Current risk
Residual risk
Vision at Center of their process to ensure value generation.
Interaction w/ core Vision.
Built ERM around core values
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SCALE TO MEASURE RISK – Presented
Implemented a 5 point scale to measure
Inherent risk
Current risk
Residual risk
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Report / Presentation reports of risk.
One for each risk identified
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Game Theory
Use Game Theory as an alternative to traditional risk assessment – qualitative or quantitative
By Game theory:
Other players assume other roles
Assess the impact of other players activities to your own.
Other decision are important , so this approach would work for the organization. IN this scenario, implication to General Motors.
War Games
For War Games, you would have Allies and Adversaries
Your actions would have implications to other actions
Others decisions are important independent to others actions.
Address question around this case for Game Theory
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Looking Forward
Top risk attention in place
Ready to add focus on day-to-day operational risks
Ready to move into a more granular level for risk management.
Developing program for operational control self- assessment (CSA)
Approach is a policy-based CSA
Starts with simple yes-no questions to line managers
Benefits of a policy-based program
Policy can be leveraged to ensure results
Helps to educate teams on larger scope objectives
Ensures that policies are current and effective
END for this case.
Be prepare to read the case in detailed and answer the questions presented in the discussion forum area.
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