Enterprise Risk Management (ERM)

Euromoney Learning Solutions

How long?

  • 5 days
  • online

What are the topics?

Euromoney Learning Solutions

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About the course

Develop an effective and practical ERM framework to manage risks

Modern risk management is no longer about control frameworks, backward-looking heatmaps or the remedial resolution of realized losses. Under Enterprise Risk Management (ERM), companies actively scan the landscape for forward-looking challenges and opportunities that manifest in affecting performance—hoping to avert or minimize emerging threats before they occur and reposition to seize opportunities when they arise. These companies will be led in these endeavors by a progressive board and a capable, senior executive of risk—i.e., the “Chief Risk Officer” (CRO)—who will act as a navigator of this landscape: encouraging greater risk ownership, risk governance and improved risk culture. In this course, we discuss these issues, as well as touch on the various tools ERM uses to facilitate this modern approach to risk management.

*Format: *

This course is specifically designed for virtual delivery with materials and sessions tested for applicability in a virtual environment. Participants will be guided through each phase and module. with numerous breaks and participation exercises (and assessments) aimed virtual knowledge transfer.

Key Course Highlights Include:

  • A proven process for implementing ERM based upon industry examples
  • Essential technical and non-technical elements necessary for establishing the ERM programme “from the top” and implementing it from below
  • Roles for board members, executives, managers, control and risk managers in the ERM process
  • The primary ERM frameworks--COSO and CAS—their strengths and weaknesses and how to implement them
  • A structure for evaluating a company’s current ERM readiness and a template for moving that company into complete readiness
  • How to get started and actually implement ERM
  • How to overcome common hurdles that make ERM stall
  • How to quantify and report many hard-to-quantify risks
  • How to establish a risk appetite and risk profile
  • How to create an executive dashboard to indicate overall risk levels

Agenda

Day One

Module 1: Introduction & Overview

  • What is Enterprise Risk Management (ERM)?
  • COSO and CAS definitions
    • Key Elements
  • Strategic
  • Comprehensive
  • Forward-looking
    • Common and important Objectives of ERM
    • Distinguishing ERM from “Traditional Risk Management”
  • Problems with traditional risk management definitions and scope
  • Implications of ineffectiveness
  • Comparisons with ERM’s effectiveness
    • ERM and the positioning of the CRO

Module 2:

  • Roles & Responsibilities within ERM
    • Role of the Board
    • Executives
    • CRO/Risk Function

Module 3:

  • Overview of how ERM works
    • Examples of aligning with strategy and devising a risk management strategy
  • Key Features of ERM
    • A new and dynamic notion of risk
    • Focus on more broad assessment of strategically-linked risks
    • Using KPIs and KRIs across the board (not just in non-financial risk)
    • ERM provides tools for strategic decision-making
  • Risk-Adjusted Performance Measurement
    • Forward-looking elements—forecasts and trends
    • Comprehensive, Top Down assessment
    • Meaningful categorizations of risk

Module 4:

  • Case Exercises:
    • The Global Petroleum Case
    • The Russian Frozen-Chicken Case
  • Homework: Home Depot Case study

Day Two

Module 1:

  • Discussion of Homework
  • The ERM Toolkit
    • VaR and Tail loss measures
    • Corporate Risk adjusted performance measurement (RAPM): a primer
      • Various Corporate RAPM measures compared and objectives defined
      • Risk-Adjusted Return on Capital (RaROC)
      • Risk-Adjusted-Return on Risk-Adjusted Capital (RaROROC)
      • Examples in Excel

Module 2:

  • Using Corporate RAPM to define the Risk Appetite
  • The SWOT Matrix
  • Heat Maps/Risk Matrices
  • Quantifying Severity and Frequency
  • Aggregation of risks
  • Dashboards
  • Setting the Risk Profile and the Risk Appetite with the tools

Module 3:

  • Using Tools in an Executive and Management Setting: Class Discussion
  • Necessary components for effective, ERM
    • Risk Governance
    • Risk Culture
    • Risk Framework

Module 4:

  • Key Ingredients for Success
    • Board and executive level buy-in
    • Solid Risk Governance (that makes sense to the business)
    • A CRO with the right personality and character
    • Good project management
    • Implementation of the right framework
    • Good relations with the regulator
    • Proper supportive analytics architecture
      • Tail loss capabilities
      • VaR and capitalisation assessment capabilities
      • Stress testing capabilities
    • Reporting beyond traditional approaches

Day Three

Module 1: Defining Risk Governance

  • Understanding Risk Exposure
    • Why it is a board and executive-level concern
    • Why managing risk requires the attention of CEOs and business heads
    • Why risk and strategy are tied
    • Why risk MUST be forward-looking and strategic
  • How misunderstandings of risk, call for the risk governance
    • Misperceptions of risks
    • Misidentification of risks
    • Miscalculation of risks
    • Miscommunication of risks
    • Mishandling and mismanagement of risks
  • Risk governance as a solution

Module 2: Evaluating the State of Risk Governance in Your Company

  • Risk Perception and Risk Culture
    • What it means
    • Biased views
    • Cognitive biases and the psychology of bad thinking
    • Major problems biases lead to
    • Exercise: Where are the biases in your company?

Module 3:

  • Risk Identification
    • How do we identify risks?
    • Backward-looking versus forward-looking
    • Risk exposure that we commonly ignore
      • Emerging risks
      • Reputation risks
      • Social-media risks
      • Customer-service-related risks
      • Strategic risks
  • Weaknesses in typical risk identification tools
  • Exercise: How do you identify risks in your company

Module 4:

  • Risk Communication
    • Famous cases of risk communication breakdown
    • The consequence of miscommunication
    • Why risk is miscommunicated
    • Tools and frameworks to better communicate risk
    • Exercise: How good is risk communication in your company?

Day Four

Module 1:

  • What the CRO’s Function should look like
    • Competent risk function staff
    • Detection tools
    • Communication tools
    • Advisory/Consultative tools
    • Monitoring and reporting tools
    • Systems

Module 2:

  • Adjacent and supporting structures
    • Board-Level structures
  • Independent, board risk committee
  • Risk appetite, risk tolerance, risk profile setting capabilities
    • Executive-level structures
  • Risk Management Committee
  • Executive Committee (EXCO)

Modules 3&4:

  • Case Discussion: Positioning the CRO for Success
  • Homework: Implementing ERM

Day Five

Module 1: Discussion of Implementing ERM Homework

  • Agreeing on the business model
  • Creating risk categories with owners and users
  • Identification of risks in categories
  • Develop a Standard Management Process
  • Implement the Process Manually
  • Build the ERM Knowledge warehouse

Module 2: Hurdles to ERM establishment and implementation

  • High-level difficulties
  • Senior-management buy-in
  • Conglomerate nightmares
  • Merger problems/benefits
  • Technical difficulties

Module 3:

  • Case Discussion: Positioning the Chief Risk Officer for Success
  • Getting Started
    • Practical implementation steps

Module 4:

  • Concluding remarks and Discussion

Experts

Maurice Ewing

Maurice is a global management consultant, former banking executive and experienced, public company board member that has worked in over 60 countries. He has been an advisor and consultant to boards and executive teams with numerous, major banks, investment banks, central banks and investment fun...

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Enterprise Risk Management (ERM) at Euromoney Learning Solutions

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