Chapters 26 Through 29: Four Mini Case Studies

Chapters 26 Through 29 Presented Four Mini Case Studies On Erm And Ris

Chapters 26 through 29 presented four mini-case studies on ERM and risk. Each one presented a slightly different risk scenario. Starting with chapter 29, assume that you have been asked to advise the Akawini management team on how they should promote and monitor the transformation of risk management in their business. What performance measures would you recommend that use so that they can monitor progress and performance? Choose one other of the chapters from this week and recommend ERM measures that organization should implement as well to monitor risks outlined in that chapter.

Paper For Above instruction

Introduction

Effective Enterprise Risk Management (ERM) is crucial for organizations to navigate complex risk landscapes and achieve strategic objectives. When advising a company like Akawini on transforming its risk management approach, selecting appropriate performance measures is essential to monitor progress, ensure accountability, and foster continuous improvement. Additionally, examining other chapters’ risk scenarios allows for tailored ERM metrics that effectively address specific risk areas within the organization. This paper recommends specific performance measures for Akawini’s ERM transformation and explores suitable metrics for a second chapter’s risk scenario, emphasizing the importance of aligning measures with organizational strategy and risk appetite.

Performance Measures for Monitoring the ERM Transformation at Akawini

To effectively promote and monitor the transformation of risk management at Akawini, management should implement a balanced set of performance measures that track both the implementation process and the desired outcomes. These metrics should encompass input, process, output, and outcome indicators, ensuring a comprehensive view of progress.

Firstly, ERM Maturity Level assessments can serve as a baseline and ongoing measure, using frameworks such as the Risk Maturity Model (RMM) (Fraser & Simkins, 2016). Regular evaluations can identify improvements in risk identification, assessment, mitigation, and communication practices (Gordon, Loeb, & Zhu, 2019).

Secondly, Risk Culture Index surveys can gauge the organization’s risk awareness and attitudes among employees. A strong risk culture promotes proactive risk management behaviors, and measuring it periodically helps track cultural shifts (Schein, 2010; Arena et al., 2018).

Third, Implementation of Risk Policies and Procedures can be measured by the percentage of departments adopting standardized ERM processes. This ensures that risk practices are integrated across the enterprise (COSO, 2017).

Fourth, Number and Quality of Risk Reports Generated provides insight into the robustness of risk information flow. Increased frequency and improved clarity indicate better awareness and communication (Beasley, Clune, & Hermanson, 2010).

Finally, Key Risk Indicators (KRIs) aligned with strategic objectives should be developed and monitored continuously. These indicators can serve as early warning signals for emerging risks and overall risk exposure (Power, 2009). Tracking the trends in KRIs over time provides tangible evidence of how well ERM practices are embedded.

Collectively, these measures offer a comprehensive dashboard that enables Akawini management to quantify progress, identify gaps, and reinforce a risk-aware culture, thereby ensuring the successful transformation of its risk management framework.

ERM Measures for a Selected Chapter’s Risk Scenario

Assuming one of the chapters from this week involved a detailed scenario focused on supply chain risks, the organization must implement specific ERM measures tailored to mitigate and oversee these risks. Supply chain risks typically involve supplier failures, geopolitical issues, logistics disruptions, and quality concerns, which can significantly impact operational continuity.

To monitor these risks effectively, the organization should adopt Supply Chain KRIs, such as supplier financial stability scores, logistics delay frequencies, and geopolitical risk indices relevant to key regions (Manuj & Mentzer, 2008). Regular monitoring of supplier credit ratings and conducting periodic supplier risk assessments provide proactive insights into potential vulnerabilities (Tang, 2006).

Moreover, Supplier Risk Reviews should be integrated into the ERM system, capturing incidences of supply interruptions, returns, or quality issues, with specific thresholds to trigger management actions (Chopra & Sodhi, 2004). Implementing scenario analysis and stress testing on the supply chain network will also help evaluate resilience under adverse conditions (Sheffi, 2005).

Additionally, developing and tracking Supplier Performance Metrics, such as delivery timeliness, defect rates, and responsiveness, will contribute to a more comprehensive risk monitoring system (Christopher, 2016). These metrics enable early detection of deteriorating supplier performance, allowing the organization to proactively mitigate potential disruptions.

By aligning ERM measures with supply chain risks, the organization can enhance visibility, responsiveness, and resilience, which are critical in maintaining operational stability and competitive advantage.

Conclusion

Effective monitoring of ERM initiatives requires carefully selected performance measures that reflect the organization's strategic priorities, risk appetite, and operational context. For Akawini, a combination of maturity assessments, cultural surveys, process implementation metrics, and KRIs will facilitate a comprehensive view of the transformation progress. For specific risk scenarios such as supply chain risks, tailored metrics like supplier KRIs, performance reviews, and stress testing are essential tools. By integrating these measures into their ERM framework, organizations can foster a proactive risk culture, optimize risk responses, and ultimately enhance organizational resilience.

References

  1. Arena, M., Arnaboldi, M., & Azzone, G. (2018). The organizational journey towards risk management. International Journal of Operations & Production Management, 38(2), 394-418.
  2. Beasley, M. S., Clune, R., & Hermanson, D. R. (2010). Enterprise risk management: An empirical analysis of factors associated with the extent of implementation. Journal of Accounting and Public Policy, 29(4), 293-306.
  3. Chopra, S., & Sodhi, M. S. (2004). Managing risk to avoid supply-chain breakdown. MIT Sloan Management Review, 46(1), 53-61.
  4. COSO. (2017). Enterprise Risk Management—Integrating with Strategy and Performance (ERM). Committee of Sponsoring Organizations of the Treadway Commission.
  5. Fraser, J., & Simkins, B. J. (2016). Enterprise Risk Management: Today's Leading Research and Best Practices for Tomorrow's Executives. Wiley.
  6. Gordon, L. A., Loeb, M. P., & Zhu, R. (2019). The impact of enterprise risk management on the risk-return tradeoff. Journal of Risk and Insurance, 86(2), 387-414.
  7. Manuj, I., & Mentzer, J. T. (2008). Global supply chain risk management practices. Journal of Business Logistics, 29(1), 133-155.
  8. Power, M. (2009). The risk management of nothing. Accounting, Organizations and Society, 34(6-7), 849-855.
  9. Schein, E. H. (2010). Organizational Culture and Leadership. Jossey-Bass.
  10. Sheffi, Y. (2005). The Resilient Enterprise: Overcoming Vulnerability for Competitive Advantage. MIT Press.
  11. Tang, C. S. (2006). Perspectives in supply chain risk management. International Journal of Production Economics, 103(2), 451-488.

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