Corporate Value of Enterprise Risk Management The Next Step in Business Management

by Segal, Sim

• ISBN13: 9780470882542
• ISBN10: 0470882549
• Edition: 1st
• Format: Hardcover
• Copyright: 2011-03-08
• Publisher: Wiley

Summary

The ultimate guide to maximizing shareholder value through ERMThe first book to introduce an emerging approach synthesizing ERM and value-based management, Corporate Value of Enterprise Risk Management clarifies ERM as a strategic business management approach that enhances strategic planning and other decision-making processes. A hot topic in the wake of a series of corporate scandals as well as the financial crisis Looks at ERM as a way to deliver on the promise of balancing risk and return A practical guide for corporate Chief Risk Officers (CROs) and other business professionals seeking to successfully implement ERMERM is here to stay. Sharing his unique insights and experiences as a recognized global thought leader in this field, author Sim Segal offers world-class guidance on how your business can successfully implement ERM to protect and increase shareholder value.

Author Biography

SIM SEGAL, FSA, CERA, is President and founder of SimErgy Consulting, which provides ERM consulting services and executive education seminars. With twenty-five years of experience in measuring and managing risk, Segal is a globally recognized ERM thought leader with experience in a variety of industry sectors, such as manufacturing, energy, entertainment, technology, services, telecommunications, banking, insurance, non-profit organizations, and government bodies. Prior to SimErgy, he led ERM consulting practices at Deloitte Consulting, Aon, and Towers Watson. Segal also serves as an adjunct professor at Columbia Business School, where he teaches an MBA/EMBA course on ERM. He has also led and co authored ERM research studies.

Table of Contents

Foreword	p. ix
Preface	p. xi
Acknowledgments	p. xix
Basic ERM Infrastructure
Introduction	p. 3
Evolution of ERM	p. 4
Basel Accords	p. 4
September 11th	p. 5
Corporate Accounting Fraud	p. 7
Hurricane Katrina	p. 9
Rating Agency Scrutiny	p. 10
Financial Crisis	p. 11
Rare Events	p. 13
Long-Term Trends	p. 14
Challenges to ERM	p. 15
Summary	p. 16
Notes	p. 16
Defining ERM	p. 18
Definition of Risk	p. 18
Definition of ERM	p. 24
Summary	p. 58
Notes	p. 59
ERM Framework	p. 61
Value-Based ERM Framework	p. 63
Challenges of Traditional ERM Frameworks	p. 63
Value-Based ERM Framework	p. 65
Overcoming the Challenges by Using a Value-Based ERM Framework	p. 83
Summary	p. 109
Notes	p. 110
ERM Process Cycle
Risk Identification	p. 113
Components of Risk Identification	p. 113
Five Keys to Successful Risk Identification	p. 114
Risk Categorization and Definition	p. 114
Qualitative Risk Assessment	p. 129
Emerging Risk Identification	p. 153
Killer Risks	p. 155
Summary	p. 166
Notes	p. 167
Risk Quantification	p. 168
Practical Modeling	p. 169
Components of Risk Quantification	p. 174
Calculate Baseline Company Value	p. 174
Quantify Individual Risk Exposures	p. 185
Quantify Enterprise Risk Exposure	p. 207
Summary	p. 223
Notes	p. 224
Risk Decision Making	p. 226
Defining Risk Appetite and Risk Limits	p. 227
Integrating ERM into Decision Making	p. 239
Summary	p. 269
Notes	p. 270
Risk Messaging	p. 271
Internal Risk Messaging	p. 271
External Risk Messaging	p. 280
Summary	p. 292
Notes	p. 293
Risk Governance and Other Topics
Risk Governance	p. 297
Focusing on Common Themes	p. 298
Components of Risk Governance	p. 298
Roles and Responsibilities	p. 298
Organizational Structure	p. 319
Policies and Procedures	p. 325
Summary	p. 327
Notes	p. 327
Financial Crisis Case Study	p. 329
Summary of the Financial Crisis	p. 330
Evaluating Bank Risk Management Practices	p. 332
Summary	p. 342
Notes	p. 343
ERM for Non-Corporate Entities	p. 344
Generalizing the Value-Based ERM Approach	p. 344
Complexities of Objectives-Based ERM	p. 350
Examples of NCEs	p. 351
Summary	p. 369
Conclusion	p. 369
Notes	p. 369
Glossary	p. 371
About the Author	p. 389
Index	p. 391
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