Enterprise Risk Management : A Methodology for Achieving Strategic Objectives

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  • Edition: 1st
  • Format: Hardcover
  • Copyright: 2008-09-29
  • Publisher: Wiley
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Written for enterprise risk management (ERM) practitioners who recognize ERM?s value to their organization, Enterprise Risk Management: A Methodology for Achieving Strategic Objectives thoroughly examines operational risk management and allows you to leverage ERM methodology in your organization by putting author and ERM authority Gregory Monahan's Strategic Objectives At Risk (SOAR) methodology to work. A must-read for anyone interested in risk management as a strategic, value-adding tool, this no-nonsense book shows you how to use ERM and SOAR to empower your company to go from stuck to competitive.

Author Biography

Gregory Monahan is a consultant and the former head of risk practice for SAS Australia. His consulting clients include SAS Australia/New Zealand, and the University of New South Wales. While at SAS Australia, he helped define and execute the marketing strategy for risk management products, primarily credit and operational risk. In addition, he helped develop the first version of the SAS Credit Risk Management Solution.

Table of Contents

Prefacep. xi
Acknowledgmentsp. xv
Introductionp. xvii
Defining Enterprise Risk Managementp. 1
Risksp. 4
Risk Driversp. 5
Controlsp. 7
Inherent and Residual Riskp. 8
Eventsp. 9
Outcomesp. 9
Managementp. 10
Enterprise Risk Managementp. 11
Strategic Objectivesp. 13
Financial Objectivesp. 14
Statement of Financial Positionp. 14
Statement of Financial Performancep. 15
Market Objectivesp. 15
Customersp. 16
Suppliersp. 16
Competitorsp. 17
Partnersp. 17
Regulatorsp. 17
Operational Objectivesp. 18
Corporate Governancep. 18
Human Resourcesp. 18
Management Teamp. 19
Processesp. 19
Systemsp. 20
Note on the Interdependence of Objectivesp. 20
At-Risk Conceptp. 22
A Very Simple Distributionp. 23
A Slightly More Interesting Distributionp. 24
Location of the Distributionp. 30
Basic Statistical Measuresp. 32
At-Risk Measurep. 33
SOAR (the Methodology): Strategic Objectives at Riskp. 38
SOAR Methodology Componentsp. 38
Strategic Objectivesp. 39
Execution Resources (The Enterprise Risk Management Office)p. 44
SOAR Processp. 45
SOAR (the Process)p. 46
Set Metrics for Defined Strategic Objectivesp. 48
Why Measure?p. 49
Classes of Metricsp. 50
Metrics for Strategic Objectivesp. 51
Metrics for Risk Driversp. 52
Metrics for Controlsp. 53
Setting Metricsp. 54
Cause and Effectp. 55
Cause-and-Effect Diagramsp. 59
Causal Loop Diagramsp. 59
Process Flow Chartsp. 60
Regression Analysisp. 62
Sensitivity Analysisp. 62
Scenario Analysisp. 63
Examples of Metricsp. 65
Setting Target Values for Metricsp. 66
Observe Metric Valuesp. 72
Observation Methodsp. 72
Gathering Available Datap. 72
Calculating Datap. 75
Self-Assessmentp. 75
Recording Observations of Metricsp. 76
Frequency of Observationp. 77
Triggersp. 78
Analyze Movements in Metricsp. 80
Conducting the Analysisp. 80
Validating the Datap. 84
Validating Metric Choicep. 89
Reporting Findingsp. 90
React to the Metric Analysisp. 94
Record the Rationale for Your Reactionp. 97
Simple Task of Reacting According to the Measuresp. 97
Confidencep. 106
Difficult Task of Managing Human Behaviorsp. 107
SOAR Dashboardp. 112
Today's Dashboardp. 112
SOAR Black Box Recorderp. 116
Existing Enterprise Risk Management Approachesp. 117
Six Sigmap. 117
Balanced Scorecardp. 118
COSOp. 118
Regulation and Compliancep. 121
Sarbanes-Oxley Actp. 121
Basel IIp. 122
AS/NZS 4360:2004:Risk Managementp. 122
Organizational Risk Management Policyp. 122
Application of the Concept of "Shifting the Distribution"p. 124
GEp. 124
Bank Treasury Operationsp. 125
Humans in Daily Lifep. 125
Airlinesp. 126
One Other Examplep. 127
Implementing the SOAR Methodologyp. 129
Resourcing the Enterprise Risk Management Officep. 129
Enterprise Risk Management Officersp. 130
Enabling Technologyp. 130
Applying the SOAR Processp. 132
SOAR in Action Examplep. 135
Set (Metrics)p. 135
Cause and Effect (and Why, Why, Why?)p. 142
Cause-and-Effect Diagramsp. 145
Causal Loop Diagramsp. 145
Process Flowchartsp. 145
Regression Analysisp. 146
Sensitivity Analysisp. 146
Scenario Analysisp. 147
Observe (End-of-Year Metric Values)p. 148
Analyze (Movements in Metric Values)p. 149
React (to the End-of-Year Analysis)p. 157
Setp. 158
Observep. 158
Analyzep. 159
Reactp. 161
Conclusionp. 163
SOAR Methodology FAQp. 165
Resourcesp. 171
Indexp. 173
Table of Contents provided by Ingram. All Rights Reserved.

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