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Advanced Enterprise Risk Management

5 Day Training

Dates:20 – 24 May | 24 – 28 June | 12 – 16 August 2024
Locations: Johannesburg, South Africa
Platform: Available In-Class / Online

Price: Available on Request

This is a Non-accredited Course

Course Introduction

In the ever-changing business environment, encountering risk is inevitable. The ability to manage these increasingly significant risks now represents the difference between a thriving organisation and one that is struggling to deal with the challenges facing it. Many businesses in the region have realised that misunderstanding risk can lead to disaster. The organisations that have dealt with the recession most effectively have realised that this requires extensive knowledge of risk management tools and techniques.

 

As the current worldwide situation demonstrates, poorly informed or improperly executed risk management can mean disaster . 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 its 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.

Course Objectives

Upon completion of the Advanced Enterprise Risk Management course, participants will be able to:

  • Generate measurable value by aligning the ERM framework with corporate performance expectations

  • Implement appropriate and varied techniques for the identification and assessment of risks

  • 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

  • Develop risk appetite statements and apply risk tolerance techniques

  • Enhance achievement of corporate objectives by linking performance targets, and risk management actions

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

Training methodology

Training Methodology

Our diverse instructional approaches ensure effective learning:

– Lectures & Presentations: Engage with expert-driven, stimulating content.
– Course Material: Access well-crafted supporting resources.
– Group Work: Collaborate on discussions and case studies for practical insights.
– Workshops & Role-Play: Participate in immersive, scenario-based activities.
– Practical Application: Focus on applying theoretical knowledge in real situations.
– Post-Training Support: Receive extensive support after training for skill implementation.

Training Outline

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

  • 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 (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)

  • 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

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

  • Mathematical technique that allows people to account for risk in quantitative analysis and decision making.

  • Provides a range of possible outcomes and the probabilities they will occur

  • Determines a probability distribution

  • The types of distribution

    • Normal (bell curve)

    • Uniform

    • Triangular

  • Uses of Monte Carlo simulations

    • Used to price complex financial instruments

    • To determine the VAR (value at risk)

    • Determining the option to expand, contract, or postpone a project

  • Exercise 10 – Monte Carlo exercise

Bayesian networks

  • Bayes theorem

  • The risk events where the  probability of one event is conditional on the probability of a previous one

  • Adding more data to an original idea to enhance decision making

  • Use of Bayesian networks

    • Weather forecasting

    • IT network failure

    • Medical diagnosis

Emergent risks

  • There is no clear boundary with other types of risk

  • Emergent Risks cannot often be easily anticipated

  • At early stages they are often low probability / high impact

  • Areas for consideration

    • Political

    • Regulatory

    • Legal

    • Security

    • Technology

    • Environmental

    • Knowledge

  • Exercise 12 – Team Exercise to enable you to appreciate the emergent risks

ERM and decision making

  • For every key proposal passed to the Board or senior management for decision, insist that a full risk analysis is submitted

  • Match key risks to corporate objectives each year.

  • Ensure that you under promise and over perform – not the other way round

  • Invite all your key stakeholders to a risk workshop

  • Analyse the major surprises and near misses that you have had in the last 12 months

  • Recognise that ‘if it seems too good to be true’ it probably is

  • Prepare media statements in advance to cover all possible crises

  • Twice a year ask all key executives to identify 3 opportunities and set up a high level workshop to discuss and prioritise them

  • Develop a corporate opportunity register

  • Offer special incentives for the best ideas to reduce risk or exploit opportunities

  • Exercise 14 – Exploiting Opportunities

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