Summary of the Benefits of ERM

Q. Make a presentation to the Board of Directors to describe the ERM process. You will hand out a summary of the benefits of ERM. Draft the handout and to include the following:
Why should Company A implement an ERM process?
What are the benefits to major stakeholders (Board of Directors, Company’s other employees, wholesale distributors, business partners, creditors, and customers)?
Who will be responsible for the ERM process?
How will a Corporate Value ERM framework assist in the company business decision making process?
How will an ERM framework address the Board’s concerns?

** Company A is a family-owned winery company
** Company A has 10 total permanent employees
** Identified Risks:
Competitor risk / loss of key customer – This is the loss of a primary distribution partner to competing wineries.
Production risk – This is the loss resulting from unexpected equipment repairs or replacement.
Counterparty credit risk – WP sells its products to various wholesalers throughout the world. This is the risk of financial loss resulting from counterparty default or delay of payment. • Market risk – Unexpected changes in external markets impacting the cost of producing wine.
Product / pricing risk – Unexpected changes in external markets impacting the price of wine.
Interest rate risk – WP has variable rate loans. This is the risk of increasing interest rates affecting the financing costs.
Labor expense risk – This is the risk of adverse changes in the cost of labor.
Business risk – This is the risk of losses resulting from general business practices and from political, regulatory, and legislative issues.
Reputation risk – This is the risk of losses due to negative publicity or failure to uphold a good reputation.
Operational risk – This is the risk of losses arising from failures in people, process, technology.
Weather / suboptimal growing condition risk – This is the risk of losses due to poor growing conditions leading to poor wine quality and low yields.