Please enable JavaScript.
Coggle requires JavaScript to display documents.
Risk Management - Soma, Risk Management Group 2a, Seminar skills &…
Risk Management - Soma
(ERM)=board's responsibility (2010)
Categories of risks (2012)
Strategy risks
high expected returns
lends money
approach based on open and explicit risk discussions
Facilitators
small central risk- management group
provides decision makers with a full picture of the company’s risk profile
workshops each year at which employees
recorded on a visual risk map, recommends action plans, and designates an “owner” for each major risk.
Embedded experts
generating new ideas, innovation, and risks
The face-to-face contact with line managers
Risk managers assess how proposed trades affect
Independent experts
project level
project leader and the head of the review board meeting quarterly
authority over budgets
External risks
events outside the company
Preventable risks.
internal risks
employees’ and managers’
approach, we refer interested readers to the sidebar
Case Study
Tesco
type; Preventable risks and Strategy risks
The 2014 profits were overstated by an increase of118 million Australian pounds
effect
Chairman Sir Richard Broadbent announced his resignation in the wake of the news, while eight executives have been suspended
scrapped its profits outlook after warning that full year profitability could be further impacted
Tesco's share price plummeted 7%
not providing full-year profit guidance
Causes of fall
CORPORATE CULTURE
a leadership vacuum
people are set targets they cannot meet and if they are afraid for the personal consequences to them of failing to meet these targets
firm’s culture go back many years
HUBRIS
low-cost competitors
shop numbers and became a genuine threat
ill-advised project in the US
lost more than £1bn
company’s credibility
Tesco’s massive investment in giant shops on retail parks
LEADERSHIP
This is a fundamental failure of leadership by the chairman. He should notice £250m
Turmoil at the top created a vacuum, with both the CEO and CFO going
CHANGE
the competition from Aldi and Lidl
the grocery market growth rate dropped off
losing share means losing revenue too
CORPORATE GOVERNANCE
audit failure
revenue recognition
corporate governance failure
COMPLACENCY
Aldi and Lidl have been major disruptive influences
like its major rivals, has been in too slow and complacent in seeing them overtaking.
When this happens you need a strong and well-respected leader
failure of corporate governance and what was clearly a hornet’s nest of intrigue, back-stabbing and protecting self interest
Plans after failure
to fix the core grocery business,
needs to work out what the customer
Tesco has a brand problem
given they’ve hired brand man Lewis.
did right
whistleblowing.
because an employee had the courage to speak up
arrangements do provide an important line of defence.”
Volkswagen
decision that emerged was a public relations disaster
type: Strategy risks
uses the company’s strategy map
The Risk Event Card
assess its strategy risks
managers create a risk card that lists the practical effects
, managers document the risks associated with achieving each of the company’s strategic objectives
Risk Report Card
organized by strategic objectives
Managers can see at a glance how many of the identified risks for each objective are critical and require attention or mitigation
Managers can also monitor progress on risk management across the company
tricks used by manufacturers
regulators failed to take urgent measures
Discussions when the case is discovered
3 Highly qualified jobs are needed in the automotive industry
2- A negative impact on the economy of countries in the automotive industry
1- Introduce strict new requirement
Meeting plans were not implemented
There is no control over companies by governments
There is no transparency and shading for the consumer who caused a reduction in profits
BP
explosion of the Deepwater Horizon rig in the Gulf of Mexico (BP)
board and senior management’s role in the multiple failures of prevention, response and recovery
need to understand these larger governance and risk management lessons in meaningful detail in order to address complicated risk
board and senior management actions against at
recommendations
; for significantly improved education and training; for better audit processes on closing out deficiencies highlighted in safety reviews; for imposing much greater oversight on contractor’s current practices; and for mandating that contractors create safety processes which BP could audit
leadership
instituted an Operations Integrity Management System
covers all aspects of safety, including management leadership and accountability, design, construction and maintenance of facilities; emergency preparedness; management of change; assessment of performance; and…thorough inquiries into accidents and incidents.”
detail the failure of leadership to take ultimate responsibility for oversight and management of subcontractors across the company
failings
inadequate risk abatement; lack of effective early warning systems; lack of effective education and training; lack of employee voice when problems arose; inadequate dissemination of lessons learned; and inadequate senior management oversight
new CEO acknowledged the need for just such a broad analysis
causes
.culture of complacency
” that never subjected to risk assessments key design and operational decisions which led to less cost and to less time — and to the explosion
recurring themes of missed warning signals, failure to share information
a general lack of appreciation of the risks involved
of the explosion and on the individual and collective failures
findings
a consistent commitment to safety by industry, from the highest management levels on down
importance of organizational culture
Risk Management Group 2a
Effective implementation of risk management
governance of the remuneration process
negotiations and decisions are not carried out at arm’s length (OECD,2009)
camouflage conditions and consequences (OECD,2009)
the link between performance and remuneration is very weak or difficult to establish (OECD,2009)
Transparency needs to be improved beyond disclosure (OECD,2009)
encourage long term performance(OECD,2009)
flexibility to adjust systems to their own circumstances(OECD,2009)
regard roles and responsibilities(OECD,2009)
remuneration policies are submitted to the annual meeting (OECD,2009)
The Exercise of Shareholder Rights
types of risk
preventable risks
operation
controllable
actively prevent
guide people to do rightly
internal
external risks
tools
strategy risks
management system
embedded expert
indepentent experts
facilitators
Board practices
Board member liability
independent experts
monitoring board effectiveness and efficiency
Seminar skills & expressions
great things
making it clear when things are your idea or someone else's idea
according to
in my opinion
hedging/cautious language
it depends on
maybe there was...
there could be...
after reading the article, I got the feeling that...
this is what I felt / understood from the article
signposting language
I want to talk about about
firstly I think...
thank you for letting me speak
I'm not going to explain them because my colleagues have already explained them
maybe I am repeating myself here but...
so that's what I think
being unsure
I'm not sure but...
I'm not sure about the UK but in my country,....
I don't really understand why that happened
maybe someone else can explain
I thought it was interesting but I didn't understand why / what the problem was
is it a collusion or is not a collusion because....some people might have benefitted from these
but HOW? WHY did it happen? WHO benefitted?
if someone could ask the question, I would really appreciate it
I didn't do any research but...
according to - erm one of the texts, I can't remember but...
I remember they were maybe...
criticality
it's very clear...
I like the word...
so the problem is...
we cannot always blame.... Sometimes it is related to...
I think this is also an important idea
speculating about what happened
try to use other case studies
I think we can discuss about what we can learn from these cases about risk management
if it was....how did...?
the problem is more fundamental
I thought the article was hard on the board
I felt it was one point of view
to be honest, when I read the articles, I though 'what?!!!!'
I want to provide a difference perspective
it was maybe a very a very complex situation at the time
using evidence
this also connects to the OECD paper
in seminars, nice to use our professional knowledge
to be honest, as an auditor, I saw a lot of this
like at Tesco...
I can't remember which article it was but it said...
there's another thing mentioned in the article...
the 8th sentence says "..." and I think this sentence shows that...
building on / expanding ideas
like Mohamed said...
as .... correctly pointed out
I can't remember what the question was...
this reminds me of yesterday when we learnt about...
things to avoid
you should.../ there is... - be careful to either use hedging/cautious language or show when it is your idea
even with case studies, don't forget to cite the different writers / sources - their description of what happened is one truth but not necessarily THE truth
I have the same problem AS (not with) Sara....
fabulous hosting by Jian
who wants to say something about these questions?
thank you for that clear idea. And...
thank you so much. I think ...'s explanation is very clear and let's me know...
so most of us think that...
if no-one has any other questions, we can go on...
OK, don't be nervous
thank you so much
I see that Tracy wants to add something
Tracy and Mohamed taught me that....and I really agree with Sarah... and Soma reminded me....
I will wait for 30 seconds to see if anyone has anything wants to say...
does anyone want to say something about BP?
ok, if you want to add something during our talk, then tell me
sorry Mohamed, Yicheng had his hand up first
Yicheng, please?
https://www.englishclub.com/grammar/pronouns-indefinite.htm
what have we learnt from a risk management perspective / point of view?
Tesco
board governance
over-confidence
independent risk manager
reporting to the board
independent from the auditor
investigate competition - especially when moving to new markets
culture of risk management
(Sarah) could have been prevented earlier if the company was more supportive of risk management and open to talk to employees about their concerns
(Mohamed) beside culture awareness, we should focus on competencies of risk management people as well
BP
one of articles said that they didn't deal well with risk
no comprehensive risk management system
"culture of complacency" (needs citing)
lack of leadership (needs citing)
at the same time, one of their competitors learnt from their accidents, whereas BP missed the warning sides
failed to share information with the management
need to focus on the culture
maybe there wasn't a risk appetite document approved by board of directors - this shows maximum risk which can be taken
I think they were taking the risks but they were not ready / prepared
VW
external impact of the EU
internal factors and external factors
perhaps the government chose to ignore emissions standards
dominant shareholders
Risk Management - Group 2b
Types of Risks
Strategic Risk
Heinman 2011 (BP)
Economia, 2014 (TESCO)
External Risk
Cometetive risk
Geopolitical and environmental
Natural or economic disasters
Preventable risks
OECD, 2019 (remuneration in the financial sector)
Economia, 2014a. (TESCO)
VW
generates a Risk Event Card for each risk on the map, listing the practical
