Week 3 Discussion: Enterprise Risk Management

Week 3 Discussionarjun Jujjuriermenterprise Risk Managementfrom The Di

From the different cases I reviewed, one case study that was most interesting to me is the case study involving Eli Lilly. I found this case study interesting because it exemplifies some of the best practices for a good ERM. The first justification is that the company involved all key leaders in risk management project. Second, the company integrated the ERM and corporate strategy effectively. The company also have multidisciplinary team and this is very important in ERM because unlike any other type of risks, ERM involves risks affecting the enterprise and most enterprises could be so big that normal traditional risk management practices may not help (Do, Railwaywalla and Thayer, 2016).

Eli Lilly’s case confirmed to me that indeed enterprise risk management requires a solid information foundation that reflects the entire enterprise, not just a single department or business area. By using all available external and internal information, cognitive platforms can extend the same analytical capabilities throughout the organization, achieving maximum visibility and greater opportunities through sharing and reusing information (Do, Railwaywalla and Thayer, 2016). The company also does well by educating employees on why they should treat ERM as a valuable undertaking that is likely to add value to the company (Florio, 2017). Lastly, I liked the fact that Eli Lilly treats risk identification as ongoing process.

Indeed, Eli Lilly demonstrates that ERM not only requires the company to identify all risks it faces and decide on the risks to be actively managed, but it also involves having a working action plan. I strongly believe that ERM is necessary in the contemporary organization. ERM is necessary for the contemporary organization because its victory determines the business enterprise’s life and health. If an organization fails to recognize risks to its existence, it will not be ready to face any risks (Kumar, 2019). Also investors choose the company they want to invest in based on their quality of ERM. They read the company’s ERM to determine the risk profile and then choose whether the company is worthwhile or not. References Florio, C. (2017). Enterprise Risk Management and Firm Performance: The Italian Case. The British Accounting Review, 56-74. Kumar, S. (2019). Importance of Enterprise Risk Management. Product Dossier. Do, H., Railwaywalla, M. and Thayer, J. (2016). Integration of ERM with Strategy. Retrieved from: Week 3 Discussion Venkata Madhu Manaswini Vinnakota ERM Enterprise Risk Management (ERM) is an emerging process that can serve many purposes: a tool for risk management, strategic planning, and identification of emerging opportunities and potential competitive advantages.

The purpose of this case study is to describe the processes used by three different companies in different industries to illustrate the ways these companies have integrated ERM in the context of their strategy. These case studies are based on real-life examples of how companies have attempted to incorporate their ERM process within their strategic planning process. These cases reveal the variety of methods that can be used based on a company's strategic objectives, business model, culture, and maturity in ERM implementation. This report also highlights critical takeaways as points of comparison when assessing the level of integration between ERM and the strategic planning and implementation process.

Mitchell Industries Case study was very interesting. It provides a brief knowledge about information and technology. Mitchell Industries is a global aerospace, defense, and information technology company (Esa, Ibrahim, Salwa, Mohd Ishak, Riazi & Riazi, 2018). They provide a broad range of management, engineering, technical, scientific, logistics, and information services. The company was founded in 1985 and has grown organically and through several acquisitions.

Headquartered in Chicago, Illinois, and incorporated in Delaware, the company conducts most of its business with the U.S. Government, principally the Department of Defense (DoD) and intelligence community. The company has 120 locations worldwide, including 72 international offices, approximately 24,000 employees, and customers in 150 countries. Overview of ERM Mitchell Industries views risk management as critical to its success. Risk management is embedded in business processes such as executive planning, program/contract management, research, and development, etc.

However, following the financial crisis, there was an increased focus on risk oversight practices (Muslih, 2019). Credit rating agencies, such as Standard and Poor's, began assessing enterprise risk management processes as part of their corporate credit rating analysis. There were signs that new requirements would be placed on Boards of Directors regarding their risk oversight responsibilities. During this same time frame, the company appointed a new board member to chair the Audit Committee, who placed an increased focus on the company's risk management practices. The organization's leadership also began to see the need for a more formal enterprise-wide process for managing risk.

All of these events led to the implementation of a legal structured ERM process in 2009. References Esa, Muneera & Ibrahim, Farah & Salwa, Siti & Mohd Ishak, Siti Salwa & Riazi, Salman & Riazi, Mehdi. (2018). Impact of Enterprise Risk Management on Organizational Performance. Journal of Advanced Research in Dynamical and Control Systems. 10. . Muslih, Mochamad. (2019). The Benefit of Enterprise Risk Management (ERM) On Firm Performance. Indonesian Management and Accounting Research. 17. 171. 10.25105/imar.v17i2.4949.

Paper For Above instruction

Enterprise Risk Management (ERM) has become an essential framework for organizations aiming to navigate the complex landscape of risks effectively. The case studies of Eli Lilly, Mitchell Industries, and others exemplify how ERM is strategically integrated into organizational processes to enhance resilience, decision-making, and value creation. This paper explores the significance of ERM through these real-world examples, highlighting best practices, implementation challenges, and the strategic importance of risk management in contemporary organizations.

Introduction

In today’s dynamic and unpredictable business environment, organizations face a multitude of risks ranging from operational and financial to strategic and reputational. ERM provides a comprehensive approach to identify, assess, and manage these risks in a holistic manner, aligning risk management with organizational strategy. The significance of ERM lies not only in risk mitigation but also in leveraging risk as an opportunity for gaining competitive advantage. This paper examines ERM practices in leading organizations, illustrating how effective risk integration supports strategic objectives and organizational resilience.

Case Study 1: Eli Lilly and Best Practices in ERM

Eli Lilly’s approach to ERM underscores several best practices crucial for effective risk management. First, Eli Lilly actively involves key leaders across the enterprise in risk management initiatives, reinforcing the multi-level and collaborative nature of ERM. This involvement ensures a comprehensive understanding of risks that span different functions, essential for developing a unified risk response (Do, Railwaywalla & Thayer, 2016). Furthermore, the company’s integration of ERM with corporate strategy enables risk considerations to influence strategic decision-making, fostering a risk-aware organizational culture.

Another notable aspect of Eli Lilly’s ERM is the reliance on a multidisciplinary team to address complex risks. This diversity in expertise enhances the organization’s ability to identify and evaluate risks from multiple perspectives. Eli Lilly also demonstrates a proactive and ongoing process for risk identification, acknowledging that risks are dynamic and require continuous monitoring and updating. The use of advanced information systems and cognitive platforms further amplifies visibility, allowing for real-time insights and swift response capabilities (Florio, 2017).

Education plays a pivotal role in Eli Lilly’s ERM strategy, as employees at all levels are trained to understand the value of risk management. This cultural embedding reinforces accountability and encourages proactive risk mitigation. The company’s emphasis on developing detailed action plans for identified risks ensures that ERM is not merely a theoretical exercise but results in tangible, operational responses. Such practices exemplify a mature ERM framework that enhances organizational resilience and decision-making efficacy.

Case Study 2: Mitchell Industries and ERM Integration in Strategic Planning

Mitchell Industries offers a contrasting yet illustrative example of ERM integration within a highly regulated, technologically intensive sector. The company’s recognition of risk management as central to its success was heightened post the 2008 financial crisis, prompting the adoption of a structured ERM process in 2009 (Muslih, 2019). Mitchell’s ERM framework is embedded in core business processes such as strategic planning, program management, and research and development, highlighting its role in operational decision-making.

A key aspect of Mitchell Industries’ ERM is its responsiveness to external scrutiny and regulatory expectations. The increased focus on risk oversight by credit rating agencies and regulators motivated the company’s leadership to strengthen risk governance. The appointment of a dedicated board member to oversee risk management underscored the importance of leadership commitment. Moreover, Mitchell’s ERM aligns with its technological orientation, utilizing data analytics and risk modeling tools to identify and mitigate risks proactively.

This integration demonstrates that ERM is not a standalone function but integrated into strategic and operational processes that support long-term objectives. By proactively managing risks related to defense contracting, technological innovation, and international operations, Mitchell Industries illustrates how ERM enhances corporate resilience and stakeholder confidence.

The Importance of ERM in Contemporary Organizations

The cases of Eli Lilly and Mitchell Industries exemplify the pivotal role of ERM in contemporary organizations. ERM facilitates the alignment of risk management with strategic objectives, enabling organizations to anticipate, evaluate, and respond to risks effectively. This proactive approach supports resilience, improves decision-making, and builds stakeholder confidence, including investors who rely heavily on an organization’s risk management framework (Kumar, 2019).

Furthermore, integrating ERM cultivates a risk-aware culture, where proactive identification and management become ingrained in organizational routines. The continuous nature of ERM allows organizations to adapt swiftly to emerging risks, thus maintaining competitive advantages in volatile environments. Technologies such as cognitive platforms and analytics tools have further enhanced ERM capabilities, providing real-time insights and facilitating informed decision-making.

Challenges and Future Directions

Despite its benefits, implementing ERM faces several challenges. These include organizational resistance, lack of leadership commitment, inadequate data infrastructure, and difficulties in integrating ERM into existing processes. Overcoming these barriers requires strong leadership, cultural change, and investment in risk management technologies.

Looking forward, the future of ERM involves greater integration with digital technologies, analytics, and strategic planning tools. Enhancing the maturity of ERM processes will enable organizations to anticipate risks more accurately and respond proactively. The development of standardized frameworks and best practices will further embed ERM into organizational DNA, supporting sustainable performance and long-term value creation.

Conclusion

In conclusion, ERM is an essential component of modern organizational strategy. The cases of Eli Lilly and Mitchell Industries demonstrate that effective ERM involves leadership involvement, integration with strategic processes, ongoing risk assessment, and technological support. As organizations navigate increasingly complex risk landscapes, embracing ERM as a strategic enabler rather than just a compliance requirement will be critical for resilience, growth, and value creation in the 21st century.

References

• Do, H., Railwaywalla, M., & Thayer, J. (2016). Integration of ERM with Strategy. Retrieved from source.
• Florio, C. (2017). Enterprise Risk Management and Firm Performance: The Italian Case. The British Accounting Review, 56-74.
• Kumar, S. (2019). Importance of Enterprise Risk Management. Product Dossier.
• Esa, M., Ibrahim, F., Salwa, S., Mohd Ishak, S., Riazi, S., & Riazi, M. (2018). Impact of Enterprise Risk Management on Organizational Performance. Journal of Advanced Research in Dynamical and Control Systems.
• Muslih, M. (2019). The Benefit of Enterprise Risk Management (ERM) On Firm Performance. Indonesian Management and Accounting Research, 17, 171.
• Ritchie, B. W., & Brindley, C. (2007). Exploring the role of risk in supply chain management. International Journal of Logistics Research and Applications, 10(4), 249-262.
• Chapman, C. (2006). Simple tools and techniques for enterprise risk management. Journal of Applied Corporate Finance, 18(4), 68-76.
• Fraser, J., & Simkins, B. (2010). Enterprise risk management: Today's leading research and best practices for tomorrow. John Wiley & Sons.
• Lam, J. (2014). Enterprise risk management: from incentives to controls. John Wiley & Sons.
• Power, M. (2007). Organized uncertainty: Designing a world of risk management. Oxford University Press.