: Gregory M. Carroll
: Mastering 21st Century Enterprise Risk Management Firing Dated Practices | The Best Practice of ERM | Implementation Secrets
: BookBaby
: 9781483510446
: 1
: CHF 10.50
:
: Sonstiges
: English
: 92
: DRM
: PC/MAC/eReader/Tablet
: ePUB
The world's top ERM thinkers say that enterprise risk management practices are not up to expectations. 'Basic risk indicators and standard formula are ultimately a very blunt model,' observed the actuarial firm Milliman; ''Corporations have to rethink their approach to risk from every aspect of their business,' said KPMG international, in a report showing about 50% of enterprises don't know their overall exposure; and ''The risk management landscape has vastly changed over the last 10 years, and Op Risk models need to keep pace,' agreed the world's top ERM thinkers at the various OpRisk conference. That's the starting point for this book by Gregory Carroll, a veteran of hundreds of enterprise risk management system implementations -- including many in life-and-death environments like the Australian Department of Defence. Carroll cites Ford Australia, Queensland Health, Ansett Airlines, and other examples of failed 20th century risk practices; then gives practical guidance on implementing a risk management system that makes the enterprise more nimble, more competitive, and, ultimately, more valuable to shareholders.

Part I. Learning from the Past: Firing Failed Risk Practices

What do I mean by ‘failed’? By"failed" I mean that risk management has failed to deliver the promised benefits. Outside the governance, risk, and compliance (GRC) fraternity, most senior executives will agree that risk management at best is an evil necessity, and at worst a bureaucratic waste of time but most likely just another failed management fad. In the same way that a weed is a plant in the wrong place, a management fad is a strategy poorly implemented. Unfortunately, when it comes to the current perception of risk management, many of those working in GRC have their heads in the sand. Instead of debating the furnishing fabrics while the house is burning, or believing we can fix it if we work harder, I believe we need to reassess our approach to risk management.

Case in point: Ford Australia closure

Ford has been an iconic brand in Australia for nearly 100 years. Supporter rivalry of Ford vs. GM was the stuff of legends, the automotive equivalent to Liverpool vs. Manchester United fans. No other product could dream of this level of consumer advocacy.

In the 1970s Ford produced the ultimate “muscle car” -- still talked about today -- and its luxury models were used as limos for visiting heads of state.

Ford Motor Company management claims it is no longer economical to manufacture in Australia due to the high labour costs. However, German manufacturers including BMW, Mercedes, Audi and Volkswagen somehow seem to be able to compete. All face similar labour costs, environmental controls, and taxes. So maybe there's something else going on at Ford.

Writing about Ford's decision in The Australian, Maurice Newman argues that government needs to"work urgently to restore our international competitiveness." He writes,"...why invest billions in modernising? The decision to shut down in October 2016 was the only rational one."

In my opinion, the fault can be firmly placed at the feet of Ford's management. The purpose of management is to cater to the push and pull of the business environment and ensure not only survival but also growth.

When management sleeps on the job

Of course, Ford didn't jump straight from dominance to closing up shop. Ford “slipped” from selling 84,000 vehicles in Australia in 2003 to only 14,000 in 2012. I think free-fall is a more apt description. An 83 percent drop in sales?

Has management at Ford been asleep the last 10 years? There is a dire lesson in this for anyone in business. Look at Ford worldwide. Ford Focus is one of the top selling cars in Europe, while the Ford F150 is one of the biggest selling pickups in the US. On top of this, Ford had a well-publicized enterprise risk management framework. Since 4 cylinder compacts and 4-wheel drive vehicles account for up to 80% of the Australian market, how could Ford Australia become “no longer economical”?

Death by 1,000 cuts

In my opinion, Ford’s product is stuck in the ‘80s. Marketing is non-existent. Customer service is laissez faire. But where were Ford’s executives, and should they have acted? They had 10 years, and that's