Fundamentals of Enterprise Risk Management: How Top Companies Assess
Risk, Manage Exposure, and Seize Opportunity
After the devastation experienced by AIG, Bear Stearns, Lehman Brothers,
and other financial institutions, the need for effective, comprehensive enterprise risk
management (ERM) systems has never been more stark or immediate.
Whether your organization needs to implement an ERM program from scratch or
radically improve upon an existing one, Fundamentals of Enterprise Risk Management is the
most up-to-date, all-in-one resource for creating a proactive, clearly articulated ERM
system. The book shows you how to use a highly innovative and surprisingly easy-to-use
visual architecture for accurately identifying your organization’s exposure to
hundreds, sometimes thousands, of risks, and clearly seeing how they interlink with one
another—and can potentially set off a cascade of negative effects.
Packed with eye-opening case studies, engaging stories, and “lessons
learned,” Fundamentals of Enterprise Risk Management helps you:
- Avoid the dire consequences of failing to recognize both your external
and internal risk exposures.
- Set up a world-class ERM system using the practical strategies, helpful
examples, and unique tools.
- Create a central, easy-to-use knowledge warehouse to share information
and support decision-making.
- See and manipulate complex risk relationships using innovative visual
software such as Riskonnect®.
- Exceed the monitoring requirements mandated by the Securities and
Exchange Commission, Basel II, the Sarbanes-Oxley Act—and much more.
John J. Hampton (Litchfield, CT) is the KPMG Professor of Business and Director of
Graduate Business Programs at St. Peter’s College, and former Executive Director of the
Risk and Insurance Management Society (RIMS).
Table of Contents
Pt. 1 Essentials of Enterprise Risk Management 1
1 Modern Risk Management 3
Russian Frozen-Chicken Case 14
2 Scope of ERM 17
3 Contributions of ERM 28
Home Depot Case 35
4 Challenge of the Black Swan 41
5 Challenge of the 2008 Financial Crisis 58
6 Implementing ERM 68
Pt. 2 ERM Technology 79
7 Visual Risk Clusters 81
AIG Visual Risk Cluster Case 88
8 Visual Risk-A Hypothetical Case 94
9 Tagging Risk-An Example 104
10 Airbus A380 Jumbo Jet 109
11 Product Launch Application 119
Pt. 3 Risks Without Risk Owners 125
12 Strategic Risk 127
Taiwan Strategic Risk Case 145
13 Subculture Risk 150
Appendix 13.A Characteristics to Use in Identifying Subcultures 164
Subculture Risk and High School Case 166
14 Leadership Risk 172
IKEA - Best Practices in Leadership Risk Case 181
15 Life Cycle Risk 185
GM and Toyota Life Cycle Risk Case 193
16 Horizon Risk 195
Pt. 4 ERM Stories 207
17 Aligning Risk Categories with the Business Model 209
18 Avoiding Business Disruption 215
19 ERM and Sarbanes-Oxley 219
20 Coffee Mug, Candy, Exotic Jams, and Toyota 223
21 ERM and Swarm Theory 227
22 Cerberus and Chrysler 230
23 Risk Management and the History of ERM 233
24 Evolving ERM Since 2004 238
25 Risk Management and the Future of ERM 243
Pt. 5 The People of Risk Management 253
26 Modern Risk Managers 255
27 Chief Risk and Strategy Officers 264
28 Risk Managers in Person 275
29 Central Risk Management Committee 288
Beaumont Central RMC Leader Case 292
Denouement 297
Bibliography 299
Index 301
306 pages, Hardcover