Chapters 30, 31, and 34(Attached) presented three mini-case studies on ERM and risk. Each one presented a slightly different risk scenario. Suppose General Motors wants to replace one of their traditi

ITS 835 Chapters 30, 31, 34 Miscellaneous Case Studies on ERM and RIsk Enterprise Risk Management Dr. Mike Peterson Overview • Three case studies • Alleged Corruption at Chessfield • Bon Boulangerie • Building an ERM Program at General Motors • Different scenarios and organizations • Useful in examining broader implications • Look for similarities Alleged Corruption at Chessfield • Chessfield • Fictional private American company in sports and entertainment • HQ in NYC • “Good ol ’ boys” board • Informal governance • Whistle -blower • CEO compensation very high (4x comparable peers) • Potential environment for excessive risk taking • Chessfield CEO requested independent governance review Chessfield , cont’d. • Review included • Document review – minimal documentation • Interviews – substantial discontent and lack of confidence in leadership • CEO compensation • Limited documentation to support decision • Basis seemed to be long relationship with decision makers • Industry standard metrics missing • Risk management • Few risk management protocols or controls • Most processes were manual (i.e. no IT) Chessfield , cont’d. • Review resulted in 45 recommendations • 43 from reviewer • 2 added by regulator • All but 2 recommendations were accepted, which were • 3 longest serving board member resign • A female be selected for directorship and compensation committee • Identify broad implications of this case Bon Boulangerie • Bakery in Oakville, Ontario • When purchased, single site retail and café • Ray Pane added wholesale operation • Plan to expand wholesale business • From 20km to 120km coverage • Include grocery stores • Add product line • Goal: triple profits in 3 years • What are the operational risks? 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 • CRO appointed • Financial and Risk Policy Committee formed • Risk officers identified and aligned to all CEO direct reports • 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” • Lessons learned • Gave responsibility of assessing risk probability and impact to senior executives • Replaced ranked risk list with tiered list • Implemented a 5 point scale to measure • Inherent risk • Current risk • Residual risk Game Theory Looking Forward • Top risk attention in place • Ready to add focus on day -to -day operational risks • 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