ITS835 Texas at Dallas General Motors Enterprise Risk Management Paper Chapters 30, 31, and 34 presented three mini-case studies on ERM and risk. Each one

ITS835 Texas at Dallas General Motors Enterprise Risk Management Paper Chapters 30, 31, and 34 presented three mini-case studies on ERM and risk. Each one presented a slightly different risk scenario. Suppose General Motors wants to replace one of their traditional lines of vehicles with all electric models. How could GM use game theory to identify and assess the major risks to this decision? Identify two major risks that would result from GM converting an existing line to an all-electric line. Provide a brief discussion of each risk, and your assessment of the levels of inherent, current, and residual risk, using GM’s five point scale.To complete this assignment, you must do the following: Suppose General Motors wants to replace one of their traditional lines of vehicles with all electric models. How could GM use game theory to identify and assess the major risks to this decision? Identify two major risks that would result from GM converting an existing line to an all-electric line. Provide a brief discussion of each risk, and your assessment of the levels of inherent, current, and residual risk, using GM’s five point scale.300 -350 words APA format ITS 835 ENTERPRISE RISK MANAGEMENT
CHAPTER 30, 31, & 34
MISCELLANEOUS CASE STUDIES ON ERM AND RISK
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1
OVERVIEW
? Three case studies
?
Alleged Corruption at Chessfield
?
Bon Boulangerie
?
Building an ERM Program at General Motors
? Different scenarios and organizations
? Useful in examining broader implications
? Look for similarities
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2
ALLEGED CORRUPTION AT CHESSFIELD
? Chessfield
?
Fictional private American company in sports and
entertainment
?
HQ in NYC
?
“Good ol’ boys” board
? Review included
?
Document review –minimal documentation
?
Interviews – substantial discontent and lack of confidence
in leadership
? CEO compensation
? Informal governance
?
Limited documentation to support decision
? Whistle-blower
?
Basis seemed to be long relationship with decision makers
?
Industry standard metrics missing
?
CEO compensation very high (4x comparable peers)
?
Potential environment for excessive risk taking
? Chessfield CEO requested independent governance
review
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? Risk management
?
Few risk management protocols or controls
?
Most processes were manual (i.e. no IT)
3
CHESSFIELD [CONT’D]
? Review resulted in 45 recommendations
?
43 from reviewer
?
2 added by regulator •
? All but 2 recommendations were accepted, which were
?
3 longest serving board member resign
?
A female be selected for directorship and compensation committee
? Identify broad implications of this case
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4
BON BOULANGERIE
? Bakery in Oakville, Ontario
?
When purchased, single site retail and café
?
Ray Pane added wholesale operation
? Plan to expand wholesale business
?
From 20km to 120km coverage
?
Include grocery stores
?
Add product line
?
Goal: triple profits in 3 years
? What are the operational risks?
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5
BUILDING AN ERM PROGRAM AT GENERAL MOTORS
? Background
? GM approach to ERM
? Game theory
? Looking forward
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6
ERM AT GENERAL MOTORS
? ERM program began in 2010
? ERM to help achieve competitive advantage
?
New CEO
?
GM bankruptcy in 2009
? CRO appointed
?
Financial and Risk Policy Committee formed
? Risk officers identified and aligned to all CEO direct
reports
? GM embraced aggressive ER
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7
GM APPROACH TO ERM
? ERM built on GM’s vision
?
Design, build, and sell the world’s best vehicles
? Identify and manage key risks
?
Bottom-up approach
?
Focus on “what can go right”
? Lessons learned
?
Gave responsibility of assessing risk probability and impact to senior executives
?
Replaced ranked risk list with tiered list
?
Implemented a 5 point scale to measure
?
Inherent risk
?
Current risk
?
Residual risk
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8
GM RISK
MANAGEMENT
PROCESS
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9
INHERENT & RESIDUAL RISK SCALES
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10
RISK
TEMPLATE
EXAMPLE
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11
GAME THEORY
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12
LOOKING FORWARD
? Top risk attention in place
?
Ready to add focus on day-to-day operational risks
? Developing program for operational control self
assessment (CSA)
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? Approach is a policy-based CSA
?
Starts with simple yes-no questions to line managers
? Benefits of a policy-based program
?
Policy can be leveraged to ensure results
?
Helps to educate teams on larger scope objectives
?
Ensures that policies are current and effective
13

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