Course description
The turmoil in the world is intense– with unimaginable impact leading to increasing public unrest, fluctuating oil prices, natural disasters of a scale thought unimaginable, volatile stock markets and world economic uncertainty. In this time of global uncertainty how do you steer a course through these difficult waters?
The answer is to recognise the only real link between all these events – RISK – and then to try to anticipate, manage and then deal with these risks at an enterprise level. Most organisations have now realised that much more is needed and have developed an Enterprise Risk management (ERM) approach.
This has ensured that risks that were previously managed in isolation can be aggregated and prioritized across the entire business.
Advanced ERM goes one step further. Risks are scored based on business materiality with each risk being evaluated and compared by it’s financial, legal, reputational, and regulatory impact, and classified by the effect they could have on the business.
New understandings of risk emerge, and efficient controls can be implemented to tackle what really matters to the business. And drive competitive advantage.
In short the focus becomes strategic risk management.
Suitability - Who should attend?
- Risk managers
- Managers and Directors responsible for the risk management function or process
- Heads of Internal Audit
- Internal Audit managers and senior auditors
- Heads of Assurance functions
- Senior Finance professionals
- Senior project managers
Outcome / Qualification etc.
- Implement appropriate and varied techniques for the identification and assessment of risks
- Generate measurable value by aligning the ERM framework with corporate performance expectations
- Engage the Board in the analysis of enterprise risk scenarios
- Foster a culture that reinforces appropriate risk-taking to balance value creation and value protection
- Clarify ERM accountabilities of all employees from executives to the front line
- Implement key risk indicators (KRI’s) for each line of business
- Enhance achievement of corporate objectives by linking performance targets, and risk management actions
- Develop risk appetite statements and apply risk tolerance techniques
CPE credits
Participants will earn 10 CPE credits ( in the Management Advisory Services field of study)
Training Course Content
Day 1: Taking Enterprise Risk Management to the next level
Characteristics of an advanced ERM process
- Board-level commitment to ERM as a critical decision framework
- An ERM culture that encourages full engagement and accountability at all levels of the organization
- Engagement of stakeholders in risk management strategy development and policy setting
- Transparency of risk communication
- Integration of financial and operational risk information into decision making
- Identification of new and emerging risks using internal data as well as information from external providers
- A move from focusing on risk avoidance and mitigation to leveraging risk and risk management options that extract value
- New paper on ERM and the role of Executive management will be shared
- Exercise 1 – The challenges involved
Extreme risk events
- Why crises such as extreme pollution, tsunamis, loss of significant critical information and the Covid 19 virus have shocked the world
- Triggers for extreme events
- Awareness of external trends – key risk indicators
- Determining a practical plan- it is not possible to plan for everything
- Identifying principal risk factors (Vodafone case study)
- Understanding of third party risks
- The domino effects – mapping the impacts
- Crisis response capability
- Allocating clear roles and responsibilities
- Post crisis review – collection and analysis of data and actions taken
- External reporting
- Learning from others – keeping up to date
- Risk register for extreme events
- Exercise 2 – Extreme risk management
Risk Attitude
- The need to define risk as the need to get things right – not what can go wrong
- ‘Ring fencing’ risk exposure – never allow one part of the business to impact the whole organisation
- Determining and communicating your attitude to risk and your required risk culture to managers and stakeholders
- Recognising that reputation is both your biggest asset and the biggest risk you face – and one you cannot insure
- Not waiting until you are required to provide evidence of effective risk management by regulators or legislation – this will usually be too late
- Exercise 3 – Enforcing a risk attitude
Key risk indicators (KRI’s)
- The banana skins
- Identifying these in advance
- Examples of KRI’s
- New KRI guidance
- How to develop effective KRI’s
- Exercise 4 – Identifying KRI’s for all key risks
The Risk register challenges
- Why the ERM process often fails to engage management
- Risks recorded are much too general
- Causes and effects are confused with risks
- Only residual risk is concentrated on
- Various different methods are used for scoring risks
- Benefits are difficult to determine
- The process is far too complex
- The Risk register solution
- Start with the business objectives
- Record the risk events
- Assess the inherent risk
- Identify the cause or causes for each risk
- Determine an accurate position for the process to mitigate each cause
- Assess the residual risk
- Determine any areas of risk exposure (or opportunity)
- Develop an action plan to deal with each exposure
- Determine a target for each risk
- Exercise 5 – The advanced ERM risk register
Risk appetite
- What is risk appetite
- The difference between risk appetite and risk tolerance
- Defining risk limits
- Risk profiling
- Developing risk appetite statements
- Examples of risk appetite statements
- Exercise 6 – Defining risk appetite for all business activities
Day 2: ERM risk measurement techniques
Risk workshops
- The power of workshops
- Techniques for successful risk workshops
- The need to involve peer groups
- Establishing a risk workshop
- Facilitation techniques
- Exercise 7 –Risk identification
Delphi (expert analysis)
- Getting consensus from experts of different backgrounds and perspectives
- Comparing the opinions of qualified experts from different fields
- Determining acceptable risk by using experts to assess e.g. total credit given versus credit available or to establish creditworthiness criteria
- Worked example
- Exercise 8 –Delphi analysis – the mystery
Ishikawa (fishbone) analysis
- Very effective in evaluating risks with multiple causes
- Steps in fishbone analysis
- Problem identification
- Primary and secondary causes
- Establishing priority criteria
- Preparing fishbone diagram
- Analysing the output
- Exercise 9 – Ishikawa exercise – loss of key personnel
Monte Carlo simulations
Bayesian networks
Bayesian networks
Emergent risks
Risk appetite and risk tolerance
ERM and decision making
Course delivery details
The course will consist of three 1.5 hour sessions each day.
Delivery method – On-line interactive (with exercises and case studies to provide practical application of the tools and techniques)
Reviews
Average rating 4.5
Excellent training
Short, compact overview of ERM still with a lot of useful details, skillfully presented.
Expenses
Course fee: GBP 450 (US$ 578) which includes comprehensive course materials.
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