Enterprise Risk Management From Incentives to Controls

by Lam, James

• ISBN13: 9781118413616
• ISBN10: 111841361X
• eBook ISBN(s): 9781118834367
• Edition: 2nd
• Format: Hardcover
• Copyright: 2014-02-18
• Publisher: Wiley
• More Book Details

Summary

A fully revised second edition focused on the best practices of enterprise risk management

Since the first edition of Enterprise Risk Management: From Incentives to Controls was published a decade ago, much has changed in the worlds of business and finance. That's why James Lam has returned with a new edition of this essential guide. Written to reflect today's dynamic market conditions, the Second Edition of Enterprise Risk Management: From Incentives to Controls clearly puts this discipline in perspective.

Engaging and informative, it skillfully examines both the art as well as the science of effective enterprise risk management practices. Along the way, it addresses the key concepts, processes, and tools underlying risk management, and lays out clear strategies to manage what is often a highly complex issue.

• Offers in-depth insights, practical advice, and real-world case studies that explore the various aspects of ERM
• Based on risk management expert James Lam's thirty years of experience in this field
• Discusses how a company should strive for balance between risk and return

Failure to properly manage risk continues to plague corporations around the world. Don't let it hurt your organization. Pick up the Second Edition of Enterprise Risk Management: From Incentives to Controls and learn how to meet the enterprise-wide risk management challenge head on, and succeed.

Author Biography

JAMES LAM is widely recognized as the first ever Chief Risk Officer and a pioneer in the field of enterprise risk management. In a Euromoney survey, Mr. Lam was nominated by clients and peers as one of the world’s leading risk consultants. He currently serves as President of James Lam & Associates and Director and Chairman, Risk Oversight Committee of E*TRADE Financial. Previously, he held positions including Partner of Oliver Wyman, Founder and President of ERisk, Chief Risk Officer of Fidelity Investments, and Chief Risk Officer of GE Capital Markets Services, Inc. In 1997, Mr. Lam received the inaugural Risk Manager of the Year Award from the Global Association of Risk Professionals. Treasury & Risk magazine named him one of the “100 Most Influential People in Finance” in 2005, 2006, and 2008.

Table of Contents

Chapter 1: Introduction

The Benefits of Risk Management

Integration Adds Value

Cautionary Tales

Chapter 2: Lessons Learned

Lesson #1: Know Your Business

Lesson #2: Establish Checks and Balances

Lesson #3: Set Limits and Boundaries

Lesson #4: Keep Your Eye on the Cash

Lesson #5: Use the Right Yardstick

Lesson #6: Pay for the Performance You Want

Lesson #7: Balance the Yin and the Yang

Chapter 3: Concepts and Processes

Risk Concepts

Risk Processes

Risk Awareness

Risk Measurement

Risk Assessments

Risk Control

Risk is a Bell Curve

Chapter 4: What is ERM?

ERM Definitions

The Benefits of ERM

Organizational Effectiveness

Risk Reporting

Business Performance

The Chief Risk Officer

Components of ERM

Chapter 5: Corporate Governance

Codes of Conduct

Best Practices

Linking Corporate Governance and ERM

Chapter 6: Line Management

The Relationship Between Line and Risk Functions

Key Challenges

Best Practices

Chapter 7: Portfolio Management

The Theory of Active Portfolio Management

Benefits of Active Portfolio Management

Practical Applications of Portfolio Management

Chapter 8: Risk Transfer

A Brief History of ART

Advantages of ART

Pitfalls of ART

A Look to the Future

Case Study: Honeywell

Case Study: Barclays

Chapter 9: Risk Analytics

Risk Control Analytics

Risk Optimization Analytics

Market Risk Analytics

Credit Risk Analytics

Operational Risk Analytics

GRC Systems

Chapter 10: Data and Technology

Early Systems

Data Management

Interface Building

Middleware

Distributed Architectures

Key Factors for a Successful Implementation

Chapter 11: Stakeholder Management

Employees

Customers

Regulators

Rating Agencies

Shareholder Service Providers

Business Partners

Chapter 12: Credit Risk Management

Key Credit Risk Concepts

The Credit Risk Management Process

Basel Requirements

Best Practices in Credit Risk Management

Case Study: Export Development Corporation (EDC)

Chapter 13: Market Risk Management

Types of Market Risk

Market Risk Measurement

Market Risk Management

Best Practices in Market Risk Management

Case Study: Market Risk Management at Chase

Chapter 14: Operational Risk Management

Operational Risk – Definition and Scope

The Operational Risk Management Process

Best Practice in Operational Risk Management

Emerging IT Risks

Case Study: Heller Financial

Chapter 15: Business Applications

Stage 1: Minimizing the Downside

Stage II: Managing Uncertainty

Stage III: Performance Optimization

The Further Evolution of Risk Management

Chapter 16: Financial Institutions

Industry Trends

Risk Management Requirements

Systemic Risk

A Look to the Future

Case Study: CIBC

Chapter 17: Energy Firms

Industry Trends

Risk Management Requirements

A Look to the Future

Lessons Learned from Enron

Lessons Learned from the BP Oil Spill

Chapter 18: Non-Financial Corporations

Risk Management Requirements

Best Practices in Corporate Risk Management

Case Study: Microsoft

Case Study: Ford

Case Study: Airbus and Boeing

Chapter 19: Predictions

The Profession of Risk Management

Technology and the Convergence of Risk Management

Ten Predictions

2013 Looking Back

Chapter 20: Everlast Financial

Chapter 21: ERM Implementation

Benefits of Corporate Governance and ERM Practices

McKinsey & Company (2002)

Brown and Caylor (2004), Cheng and Wu (2005)

Hoyt and Liebenberg (2009)

Standard & Poor’s (2010)

ERM Implementation Requirements

ERM Maturity Model

Stage 1: Definition and Planning (White Belt)

Stage 2: Early Development (Yellow Belt)

Stage 3: Standard Practice (Green Belt)

Stage 4: Business Integration (Brown Belt)

Stage 5: Business Optimization (Black Belt)

Other ERM Maturity Models

Risk Culture

Chapter 22: Role of the Board

Board Oversight Requirements

Current Board Practices

The Last Line of Defense

Chapter 23: Risk Assessment

Risk Assessment Methodology

Best Practice Case Studies in Risk Assessment

Best-Practice Example: The Global Risk Report

Appendix: Risk Assessment Self-Evaluation Checklist

Chapter 24: Risk-Based Decision Making

ERM Decisions and Actions

Creating Value through ERM

Case Study: Duke Energy

Chapter 25: Dashboard Reporting

Traditional Vs. Dashboard Reporting

General Dashboard Applications

ERM Dashboard Implementation

Evolving Best Practices