...Casualty Actuarial Society Committee on Enterprise Risk Management has adopted the following definition which includes the purpose of ERM : “ERM is the discipline by which an organization in any industry assesses, controls, exploits, finances, and monitors risks from all sources for the purpose of increasing the organization’s short – and long-term value to its stakeholders.” In the US, COSO published its ERM-Integrated framework in 2004. COSO identified a need for robust framework to help companies effectively identify, assess, and manage risk. The resulting framework has eight components and four objectives. The eight components are:- * Internal Environment- It encompasses the tone of an organization, and sets the basis for how risk and control are viewed and addressed by an entity’s people. * Objective setting –Objectives must be aligned with the organization’s risk appetite, which derives risk tolerance levels for the organization. * Event identification-Management identifies potential events that, if they occur, will affect the entity’s ability to successfully implement the strategy and achieve objectives adversely or positively. * Risk Assessment-It allows an entity to consider the extent to which potential events have an impact on achievement of objectives. * Risk response-It includes risk avoidance, reduction, sharing and acceptance. * Control Activities-These are the policies & procedures that help ensure the management’s risk responses...
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...换一个你的 School of Management, University of Glamorgan Research on Internal Audit Participate in Risk Management-Based on the ERM Framework of COSO By: Weichen Zhu Candidate no: 学号 September 2012 Supervised by: 你导师的名字 The dissertation is submitted as part of the requirement for the award of Masters of Science: 你专业的名字 Declaration This Dissertation has been prepared on the basis of my own work and that where other published and unpublished source materials have been used, these have been acknowledged. Word Count: Student Name: __________________ Signature: ______________________ Date of Submission:______________ Acknowledgement This is my first time to go aboard for studying. During different campus life in the UK, it is wonderful with deep impression. I learned how to use my internal power to make things happen and how to live my own life. All efforts contribute to my growth, but I cannot forget people who encourage and help me. Probably, I am not happy to study in my whole postgraduate time without support. Firstly, I would like to thank my supervisor 你导师的名字. He helps me develop the ideas and complete this dissertation. Especially, when I make a survey in China, I communicate with him through email. Sometimes, I am afraid that my timetable could have bad effects on him. However, he usually gives me feedback as soon as possible. Therefore, I only use 20 days to finish my survey. This kind of strong professional ethic is worth to learn...
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...Enterprise risk management is processes to achieve future strategic objectives try to control the results that uncertain factors cause, which are expected acceptable ranges that ensure and promote the realization of the overall interests of the organization. Enterprise risk management (ERM) framework is the integration concept on the basis of the internal control framework of Fraudulent Financial Reporting National Committee of Sponsoring Organizations Commission (COSO) belonging to the Treadway Commission in September 2004. ERM is participated by the Board of Directors, management and other employees, which uses in Strategy formulation and identifies possible potential impacts on matters of the enterprise. It also manages risks within the scope of its risk appetite. ERM provides reasonable protection for the enterprise to achieve the objective. Based on the 7 Essential Elements of ERM and the role of Internal Audit by Tony Harb, a perfect enterprise risk manager should be clear what ERM will cover, what enterprise risk management is, why the ERM is becoming more important, how relative people know ERM is alive and well. Meanwhile, internal audit should link between ERM and internal audit (Harb, para.2008)....
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...19. 20. 21. 22. 23. 24. What is Enterprise Risk Management (ERM)? Why implement ERM? How does the scope of ERM compare to existing risk management approaches? What is the value proposition for implementing ERM? Which companies are implementing ERM? If companies are not implementing ERM, then what are they doing? Who is responsible for ERM? What are the steps companies can take immediately to implement ERM? Is ERM applicable to smaller and less complex organizations? Why have companies that have tried to implement ERM failed in their efforts? Does implementation of ERM ensure the success of a business? What is the difference between ERM and management? What does it mean to “implement ERM”? Generally, how long does it take to implement ERM? Is there any way to benchmark the level of investment required to implement ERM? Don’t successfully run companies already apply ERM? How long has ERM been around and why is there a renewed focus on it? What percentage of public companies currently have an ERM process or system? Is there an example of effective ERM as it is applied in practice? How does the application of ERM vary by industry? Are there any organizations that need not implement ERM? What are the regulatory mandates for implementing ERM? Are standards for implementing ERM different for private and public companies? Must companies have sophisticated processes in all areas of risk management to realize the benefits of ERM? 1 3 3 5 7 9 10 11 11 11 11 12 12 12 13 13 14 14 15 16...
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...ERM Paper Effective business management requires that organizational leaders balance risks with outcomes. This is necessary as without taking some risks, organizations will never be able to expand and grow in their industries. Unfortunately for many organizations, this balancing act is not strategized and as a result risks control the organization instead of the organization controlling the risks. To prevent this from happening it is necessary to engage what is known as Enterprise Risk Management (ERM) (Cheeseman, 2010). This essay will examine how ERM strategies can be used to mediate the effects of tort risks and violations. Potential Tort Risk The type of tort risk that was addressed in the simulation was injury to plaintiff, personal injury. Actual cause: Ms. Bates was claiming that if the Alumina Inc. situation had not occurred five years ago, then her daughter would not have leukemia. Special negligence doctrine: a tort that permits a person to recover for emotional distress caused by the defendant’s negligent conduct. Negligence Per Se: Violation of a statue that causes an injury, statue was enacted to prevent injury. Strict Liability (Rationale): The activities of Alumina Inc. five years ago did place the public at risk, even though reasonable care was taken. These tort risks would be classified as Unintentional Torts (Cheeseman, H. R., 20120). The simulation also presented some other tort risk. The tort risk would have been a result of Alumina Inc., counter...
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...any corporations or persons to be involved in global bribery and required all companies to implement internal control systems. In 1985, in response to these reforms 5 major private sector accounting associations together created The Committee Of Sponsoring Organizations, also referred to as COSO, to help sponsor the National Commission on Fraudulent Financial Reporting (Treadway Commission). The 5 associations included the American Institute of Certified Public Accountants, American Accounting Association, Financial Executives International, Institute of Internal Auditors and the Institute of Management Accountants. The original chairman of COSO was James Treadway, which led to it being referred to as the Treadway Commission. This association was formed to inspect, analyze and make recommendations of fraudulent corporate financial reporting. Today this association is dedicated to providing thought leadership through the development of frameworks and guidance on enterprise risk management, internal control and fraud deterrence. COSO offers 5 key components to the Internal Control Framework: Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring. Control Environment basically sets the groundwork for an organization by directly influencing the employees directly. This also is the foundation for all the other factors of Internal Control by providing discipline and structure. The control environment factors include delegation of...
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...Risk-Based IT Audit Risk-Based Audit Methodology Apply to Organization’s IT Risk Management Kun Tao (Quincy) Cal Poly Pomona Author Note This paper was prepared for GBA 577 Advanced IS Auditing, taught by Professor Manson. March 2014 Page 1 of 26 Risk-Based IT Audit Table of Contents Abstract .......................................................................................................................................... 3 Introduction .................................................................................................................................... 4 Methodology................................................................................................................................... 6 Risk-based auditing methodology: Risk assessment...................................................................... 6 IT Risk Management................................................................................................................... 7 IT Risk Control Framework........................................................................................................ 8 Identifying assets...................................................................................................................... 13 Determining criticality and confidentiality levels......................................................................14 Threat and vulnerability identification................................................................
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...ERM 7-Step Process ERM 7-Step Process According to Harb, Enterprise Risk Management is people, systems and processes working together across the organizations to systematically think about and manage a wide range of risks that could impede achieving organizational objectives/opportunities. In this paper we will discuss the potential tort risk that arose as a result of Non-Linear Pro leasing unsatisfactory equipment to Quick Takes, and how to effectively apply the 7-Step Enterprise Risk Management process in evaluating the violation that was imposed upon Quick Takes by Non-Linear Pro, when they failed to supply equipment that performed as advertised it to perform. In the Product Liability Video, Non-Linear Pro leased hardware to Quick Takes. The equipment was leased to Quick Takes with the understanding that it would speed up editing time. Quick Takes soon discovered that the equipment did not have enough memory to get the job done, which caused their competent editors to work tirelessly for two weeks with little results. From the video we gather that Non Linear Pro has committed several tort violations in the dealings with Quick Takes such as: 1. Misrepresenting the quality of the product. 2. Express Warranties – Non Linear Pro made the express warranty as to the way a product would perform, guaranteeing the product would in fact perform that way. 3. Breach of Contract – Product did not perform the way it is intended to. 4. Damages: Benefit of the Bargain- Employees...
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...MANAGEMENT POLICY 10-12 7. RISK MANAGEMENT ARCHITECTURE 12-15 8. RISK AWARE CULTURE 15-17 9. ISO 31000 APPLICATION IN CHOPPIES ENTERPRISES LTD 17-18 10. RECOMMENDATIONS 18 11. CONCLUSION 18 12. References 19-20 Terms of Reference This report strives to evaluate the effectiveness of Choppies Enterprises Limited ERM, using the ISO 31000 Risk Management framework as a standard, documenting the findings and making appropriate recommendations. The main tasks are to: 1. Explain the importance of a risk management policy, and outline a proposed policy that complies with ISO 31000 guidelines that would be suitable for our organization. 2. Document the risk management architecture of our organization, clearly showing the roles and accountabilities of each of the key parties, and making...
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...Butterworth-Heinemann is an imprint of Elsevier Linacre House, Jordan Hill, Oxford OX2 8DP, UK 30 Corporate Drive, Suite 400, Burlington, MA 01803, USA First edition 2009 Copyright © 2009 Elsevier Ltd. All rights reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher Permissions may be sought directly from Elsevier’s Science & Technology Rights Department in Oxford, UK: phone (144) (0) 1865 843830; fax (144) (0) 1865 853333; email: permissions@elsevier.com. Alternatively you can submit your request online by visiting the Elsevier web site at http://elsevier.com/locate/permissions, and selecting Obtaining permission to use Elsevier material Notice No responsibility is assumed by the publisher for any injury and/or damage to persons or property as a matter of products liability, negligence or otherwise, or from any use or operation of any methods, products, instructions or ideas contained in the material herein. Because of rapid advances in the medical sciences, in particular, independent verification of diagnoses and drug dosages should be made. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloguing in Publication Data A catalog record for this book is available from the Library of Congress ISBN–13:...
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...ERM Paper LAW/531 ERM Paper The business regulation simulation presented involves Alumina Inc., a United States based aluminum manufacturing corporation located on the fringes of Lake Dira. Alumina was discovered to be in violation of environmental discharge norms following a routine EPA compliance evaluation inspection five years ago. The company subsequently corrected this violation and has since enjoyed a good overall environmental compliance record. This paper will identify potential tort risks resulting from this violation and utilize the seven-step Harb process to mitigate associated business risks. Torts Alumina Inc. is considered one of the largest aluminum makers in the world. The company operates in Erehwon and is under the EPS’s jurisdiction in region 6. The first tort against Alumina was found to be negligence. Five years ago, Alumina failed to follow the environmental discharge norms set by the EPA that resulted in high levels of PAH in the samples. Polycyclic aromatic hydrocarbons (PAH) are a family of chemicals primarily derived from oil and coal but also produced as byproducts from burning of a variety of materials (Nevison, 2008). The EPA demanded a clean-up in which Alumina quickly complied and rectified the negligence allegation. Alumina was allowed to continue business without prosecution and complied with all regulation following the incident. However, Kelly Bates, a resident of the community where Alumina operates, is claiming that her 10-year-old...
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...directors, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of the entity’s objectives.” In summary, ERM: * Forms a basis for the credit union’s decision making processes from the development of its strategy and objectives to its daily operations, reporting and compliance routines; * Provides the ability for management to make more efficient use/allocation of capital and resources within the organization to optimize capital levels. * Optimizes risk management by balancing the cost of risk with the cost of control for all aspects of the credit union’s potential risk areas to ensure organizational objectives are met. * Seeks to enhance value and preserve the longer term viability of the credit union. The importance of enterprise risk management Value is created by informed and inspired management decisions in all spheres of an entity’s activities, from strategy setting to operations. Entities failing to recognize the risks they face, from external or internal sources and to manage them effectively can destroy value – in absolute or relative terms for shareholders and other stakeholders, including the community and society at large. For companies, shareholders realize value when they recognize value creation and benefit from share-value growth. For governmental...
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...A tort is a civil violation that causes injury or harm to a party, which tort law seeks to provide relief for those damages (Tort Law Overview, 2010). There are several main categories of tort law that are “intentional torts, negligent torts, and strict product liability torts” (Tort Law Overview, 2010, para. 4). We will use the above-mentioned categories to discuss the tortious acts caused by Nonlinear Pro against Quick Takes Video. We will identify potential tort risks, apply Harb’s 7-step risk management process to the main tort violation to mitigate the risk, and discuss when it is time to involve legal counsel. Potential Tort Risks After reviewing the product liability video Team A found there were a number of torts violations, we will discuss intentional torts, negligence, product liability. Intentional Torts According to Cheeseman (2010) an intentional tort is, “a category of torts that requires the defendant possessed the intent to do the act that caused the plaintiffs injuries” (p. 75). Here, we will discuss how Nonlinear Pro intentional misrepresented the product to Quick Takes Video. Intentional Misrepresentation. Intentional Misrepresentation is, false representation of material facts with the scienter, the innocent party must rely on the misrepresentation, and there is an injury (Chesseman, 2010). Nonlinear Pro promises Quick Takes Video a superior product that will meet their needs and cut project time in half. These benefits came at a lower cost than their...
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...Tort Risk Prevention through ERM Jaime Rodriguez LAWP/531 May 25, 2013 Gregory Martin Tort Risk Prevention through ERM The business regulation simulation proved to have a variety of potential tort risks in the exercise. Alumina Inc. had the misfortune of being caught with a violation by the EPA and failure to have appropriate measures in place led to the allegations from Kelly Bates. Although the company corrected the problem, it was not clear what steps Alumina Inc. continued to take after the incident occurred. Following the seven steps as defined by Tony Harb would provide Alumina Inc with a structured model to follow and to manage their risk with greater efficiency. Tort Violations The initial violation that Alumina Inc. was found guilty of was having a discharge that was above the standards set by the Environmental Protection Agency (EPA). With Alumina Inc. being situated in proximity to Lake Dira, they need to have stringent policies in place to ensure that any discharge from their plant would not exceed the maximum amount allowed by the EPA. Failing to maintain this standard has resulted in negligence on their part regardless of whether or not they addressed the problem in a prompt manner. Although the issue was corrected quickly, the damages continued further down the road and exposed the corporation to the potential for lawsuits against...
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...managing risk in a way that enables the corporation to take advantage of valueenhancing opportunities. A missed strategic opportunity can result in a greater loss of (potential) value than an unfortunate incident or adverse change in prices or markets. As in the past, many organizations continue to address risk in “silos,” with the management of insurance, foreign exchange risk, operational risk, credit risk, and commodity risks each conducted as narrowly focused and fragmented activities. Under the new enterprise risk management (ERM) approach, all would function as parts of an integrated, strategic, and enterprise-wide system.1 And while risk management is coordinated with senior-level oversight, employees at all levels of the organization are encouraged to view risk management as an integral and ongoing part of their jobs. While there are theoretical arguments for corporate risk management,2 the main drivers for the implementation of ERM systems have been studies such as the Joint Australian/ New Zealand Standard for Risk Management, Committee of Sponsoring Organizations of the Treadway Commission (COSO) in the U.S. (in response to the control problems in the S&L industry), the Group of Thirty Report in the U.S. (following derivatives disasters in the early 1990s), CoCo (the Criteria of Control...
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