ITS835 Cumberlands ERM Implementation Article Discussion Review the chapters from this week’s lesson and provide a 1-2 page summary reflecting on how conte
ITS835 Cumberlands ERM Implementation Article Discussion Review the chapters from this week’s lesson and provide a 1-2 page summary reflecting on how content from it can be used in your professional career.
Your writeup should include:
1. Title Page
2. Content
3. References (if applicable)
300 -350 words APA format with reference ITS 835 ENTERPRISE RISK MANAGEMENT
CHAPTER 25
ERM – USES OF EFFICIENT FRONTIER ANALYSIS IN STRATEGIC RISK MANAGEMENT
UNIVERSITY OF CUMBERLANDS
1
INTRODUCTION
? Strategic risk management framework
? Modern portfolio theory
? Practical application of risk measurement for insurance
? Sample case study
? Intended uses
UNIVERSITY OF CUMBERLANDS
2
STRATEGIC RISK MANAGEMENT FRAMEWORK
? Enables organization to discover risks
?
Across organizational boundaries
? Continuous cycle
? Considers interactions of multiple risks
? Combines risk appetite and risk tolerance
? Defines exploitable risks
UNIVERSITY OF CUMBERLANDS
3
STRATEGIC RISK
MANAGEMENT
UNIVERSITY OF CUMBERLANDS
4
MODERN PORTFOLIO THEORY
? Mathematical model from 1950s
? Risk is standard deviation
?
When portfolio is weighted combination of assets
? Rp return of portfolio
? Ri return of asset i
? Wi weighting of asset i
UNIVERSITY OF CUMBERLANDS
5
PRACTICAL APPLICATION OF RISK MEASUREMENT FOR INSURANCE
? Purpose is to optimize insurance placements
?
And risk limits
? Tail value at risk of loss TVaRL
?
Expected value of loss, given that an event has occurred
UNIVERSITY OF CUMBERLANDS
6
SAMPLE CASE
STUDY
? Three basic risks
?
Earthquake exposure to
buildings
?
Workers compensation
insurance
?
General liability insurance
UNIVERSITY OF CUMBERLANDS
7
PORTFOLIO
OPTIONS
UNIVERSITY OF CUMBERLANDS
8
EARTHQUAKE OPTIONS
UNIVERSITY OF CUMBERLANDS
9
WORKERS COMPENSATION OPTIONS
UNIVERSITY OF CUMBERLANDS
10
GENERAL
LIABILITY
OPTIONS
UNIVERSITY OF CUMBERLANDS
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COMBINED
PORTFOLIO
OPTIONS
UNIVERSITY OF CUMBERLANDS
12
INTENDED USES
?
Help large organizations
?
Risk management
?
Portfolio management
? Insurance and non-insurance risks
? Best fit
?
Established ERM
UNIVERSITY OF CUMBERLANDS
13
ITS 835 ENTERPRISE RISK MANAGEMENT
CHAPTER 22
ERM – JAA INC. A CASE STUDY IN CREATING VALUE FROM UNCERTAINTY
UNIVERSITY OF CUMBERLANDS
1
INTRODUCTION
? Business background
? Initial steps
? Evolution of Risk Management
? Introduction of ISO 31000 and HB 436 to JAA
? Bringing everything together
UNIVERSITY OF CUMBERLANDS
2
BUSINESS BACKGROUND
? JSS is a clothing wholesaler and retailer
? Founded in 1972
? Went public in 1998
? Three operating segments
?
U.S. wholesale
?
U.S. retail
?
International (wholesale and retail)
? 57 retail stores in 10 countries
UNIVERSITY OF CUMBERLANDS
3
INITIAL STEPS
? Strategic objectives
?
Maintain market leadership
?
Sustain technology leadership
?
Strengthen global presence
?
Deliver quality service
?
A leader in compliance with all laws and regulation
UNIVERSITY OF CUMBERLANDS
? Establish a governance system
?
Multiple committees, each with specific responsibilities
4
GOVERNANCE
FRAMEWORK
UNIVERSITY OF CUMBERLANDS
5
EVOLUTION OF RISK MANAGEMENT
? Lack of strategic risk management led to many problems
?
Communication
?
Missed/lost opportunities
?
Lack of commitment to objectives
?
Declining quality
? Identified gaps in risk management
? Engaged in aggressive internal training
?
Soft skills
?
Team building
?
Management planning
UNIVERSITY OF CUMBERLANDS
6
INTRODUCTIONS OF ISO 31000 AND HB 436
? JAA adopted ISO 31000
?
HB 436 provided extensive implementation guidance
? ISO 31000 was basically an upgrade of the framework JAA was already using
? ISO 31000 framework formalized JAAs ERM
?
Defined organization and process
UNIVERSITY OF CUMBERLANDS
7
USING
CONTEXT
FOR RISK
CRITERIA
UNIVERSITY OF CUMBERLANDS
8
BRINGING
EVERYONE
TOGETHER
UNIVERSITY OF CUMBERLANDS
9
RISK MAP
UNIVERSITY OF CUMBERLANDS
10
RISK ATTITUDE
UNIVERSITY OF CUMBERLANDS
11
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