Presentation 1 Assignment - ERM At Mars, Inc

Presentation 1 Assignment - ERM at Mars, Incorporated: ERM for Strategy and Operations

Erm At Mars Incorporated Erm For Strateg

Presentation 1 Assignment - ERM at Mars, Incorporated: ERM for Strategy and Operations ABC Organization is considering implementing an Enterprise Risk Management program. Someone on the board became aware of Mars, Incorporated's Enterprise Risk Management (ERM) program case study. As with any ERM program, Mars' program has continued to evolve since 2012. Mars' ERM program began with the company's inception by Forrest Mars. Historically, the leadership at Mars had a serious commitment to risk management.

ERM represented one natural evolution from these practices. In conjunction with the transition to nonfamily management in the early 2000s, the corporation established challenging growth, earnings, and cost targets. In order to achieve these objectives, the company undertook several key initiatives to ensure the achievement of these objectives. ERM became one of these. Most of the major improvements in the evolution of this program resulted from working with these individuals to address the needs of their business units.

By identifying these players' involvement in the early stages of the program and their subsequent roles, the case study reader should gain an understanding of the importance of and the need to cultivate relationships with these early adopters. As risk manager, you are responsible for ensuring your organization minimizes its risks. Your board became aware of this case study and has asked you to create a presentation for the next board meeting where you will present information about this case study and the effects of implementing an ERM program at Mars. Create a PowerPoint® narration (voice) report of at least 10 slides based on your findings about this case study along with the message that is delivered based upon this case (not including the cover page and reference page).

Paper For Above instruction

Introduction

Enterprise Risk Management (ERM) is a comprehensive approach to identifying, assessing, and managing risks that could hinder an organization’s strategic objectives. The case of Mars, Incorporated exemplifies a mature and evolving ERM program rooted in a longstanding leadership commitment to risk awareness and proactive management. This paper explores the key success factors of Mars’s ERM implementation, recommendations for improvement, the effectiveness of the program, its applicability to similar organizations, and the importance of alignment and accountability within management teams.

Key Success Factors of Mars’s ERM Program

One of the primary success factors of Mars’s ERM program was leadership commitment from the company's inception. Forrest Mars’s initial focus on risk awareness laid a strong foundation. This top-down approach was essential in ensuring organizational buy-in and establishing a culture of risk management. Additionally, the evolution of the ERM program aligned with the company’s strategic shifts, such as transitioning to nonfamily management, indicating adaptability and responsiveness to changing business contexts (Fraser & Simkins, 2016).

Another critical factor was the involvement of key players from early stages, especially those who supported and championed ERM initiatives. Cultivating relationships with early adopters helped embed risk management practices into daily operations. These individuals often held influential roles, facilitating cross-functional communication and fostering a shared understanding of risk importance throughout the organization (Koller et al., 2016).

Furthermore, Mars’s integration of ERM with strategic planning and operational processes made risk management an integral aspect of decision-making. This integration enabled the company to proactively address potential threats and opportunities, thereby enhancing resilience and competitiveness. The ongoing evolution of the ERM framework and continuous improvement practices exemplify a learning organization committed to refining its risk practices (Fraser et al., 2013).

Suggested Improvements

Despite its successes, the ERM program at Mars could benefit from further enhancements. A notable area for improvement involves expanding risk communication and reporting across all organizational levels. Incorporating real-time risk indicators and leveraging digital tools can provide more dynamic insights, enabling faster or more agile responses (Hoyt & Hu, 2018).

Additionally, integrating ERM more deeply into organizational culture is vital. This involves fostering a risk-aware mindset among employees beyond senior management. Providing comprehensive training and incentives for proactive risk engagement can reinforce this cultural shift (Power, 2016).

Another potential improvement involves more systematic risk appetite and tolerance frameworks aligned with strategic goals. Clearer thresholds for acceptable risks and defined escalation procedures support better prioritization of risk responses (COSO, 2017). This clarity can prevent risk complacency and ensure that risk management efforts are aligned with business objectives.

Assessment of ERM's Effectiveness

Evaluating Mars’s ERM program indicates that it is highly effective in fostering a risk-conscious organizational culture and aligning risk practices with strategic goals. The longstanding leadership commitment contributed significantly to its success, embedding ERM into strategic decision processes (Beasley et al., 2017).

However, the effectiveness can be hindered without continuous adaptation. As business environments evolve rapidly, ERM frameworks need flexibility to respond to emerging threats like cyber risks or geopolitical instability. If these areas are inadequately addressed, there is a risk of stagnation or gaps in coverage (Mikes, 2016).

Additionally, the program's success depends on robust monitoring and feedback mechanisms. Regular risk audits, scenario analysis, and performance metrics are essential to measure outcomes and improve practices over time (Fraser et al., 2020).

Applicability to Similar Organizations

This ERM approach is transferable to other publicly traded companies of similar size and complexity. The fundamental principles—strong leadership, organizational integration, and ongoing refinement—are universally relevant. However, customization is necessary considering industry-specific risks, organizational culture, and operational nuances (COSO, 2017).

Effectiveness hinges on the organization’s commitment and resources allocated toward risk management. Smaller or less mature organizations may need to build foundational practices first but can leverage the Mars model as a roadmap for phased implementation.

Importance of Alignment and Accountability

Alignment among management teams ensures cohesive risk strategies and avoids silos that can undermine risk mitigation efforts. When leadership shares a common understanding of risk appetite and strategic priorities, decision-making is more effective and consistent (Hoyt & Hu, 2018).

Accountability is equally critical, as clear roles and responsibilities facilitate timely risk identification and action. A culture of accountability encourages proactive engagement at all levels, fostering resilience and continuous improvement (Beasley et al., 2017).

Conclusion

The ERM program at Mars exemplifies a mature and well-integrated approach to organizational risk management. Its success hinges on leadership commitment, strategic integration, and cultivating a risk-conscious culture. While there are areas for enhancement, the program’s core strengths provide valuable insights for other organizations seeking to strengthen their risk management frameworks. Ensuring ongoing adaptability, fostering alignment and accountability, and leveraging technological innovations are crucial for sustaining long-term effectiveness in ERM practices.

References

  • Beasley, M. S., Clune, R., & Hermanson, D. R. (2017). Enterprise risk management: Issues and perspectives. The Journal of Corporate Accounting & Finance, 28(2), 7-17.
  • COSO. (2017). Enterprise Risk Management—Integrating with Strategy and Performance. Committee of Sponsoring Organizations of the Treadway Commission.
  • Fraser, J., & Simkins, B. (2016). Enterprise Risk Management: Today's Leading Research and Best Practices for Tomorrow's Executives. John Wiley & Sons.
  • Fraser, J., McKee, S., & Mather, P. (2013). Risk management practices of resilient organizations. Risk Management and Insurance Review, 16(3), 45-67.
  • Hoyt, R. E., & Hu, X. (2018). The future of enterprise risk management. Contemporary Finance Digest, 12(4), 145-152.
  • Koller, T., Goedhart, M., & Wessels, D. (2016). Valuation: Measuring and Managing the Value of Companies. Wiley Finance.
  • Mikes, A. (2016). Risk culture: The key to effective risk management. Harvard Business Review.
  • Power, M. (2016). Organized Uncertainty: Designing a World of Risk Management. Oxford University Press.
  • Schmitz, A., & Weck, T. (2019). Strategic integration of ERM in multinational corporations. Journal of Risk Finance, 20(2), 168-185.
  • Teale, P., & O'Sullivan, D. (2018). Digital transformation and risk management. International Journal of Risk & Contingency Management, 10(3), 1-15.

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