Chapter 18 presented special risk management issues with Blue Wood Chocolates, and chapter 19 presented various financial risks at Kilgore Custom Milling. If Blue Wood Chocolate and Kilgore Custom Mil

ITS 835 Chapter 18 Blue Wood Chocolates Enterprise Risk Management Professor Michael Solomon Introduction • Background • Market overview • Blue Wood financial performance • Conclusion Background • U.S. Manufacturer of chocolate products • Privately owned (family) • New CFO • Outsider • Brought in to stabilize financial performance • Blue Wood risk management practice in doubt • Banks wondering if RM gaps are causing unstable finances • Considering taking action • Internal politics and conflict Market Overview • Growing market • Major competitive factors • Large producers • Brand recognition / reputation • Cocoa markets overview • Sugar markets overview • Milk markets overview Blue Wood Financial Performance • Profitability measures worse that competitors • Lots of internal finger pointing • Deteriorated cash position • Currently borrowing against revolving line • Retained earnings falling • Substantial investments • In case cash flow couldn't cover dividend payments • Potential $10 million lawsuit • Risky entrance into currency hedges and futures Conclusion • Business underperforming • Immediate action is necessary to respond to banks • CFO requires • Overall view of corporate objectives • Major risks facing the company • Must have support from the top • After initial pass • Implement ERM