Monthly Archives: March 2010

AXA’s ERM lowered by S&P

March 31, 2010

I re-post these press releases from time to time from the S&P as a way to bring awareness to enterprise risk management and how the rating agency’s review of their capability plays into their overall rating. This is the first time that I have see an explicit worsening in an ERM capability in these ratings. I suppose it is possible but I am curious how one goes from excellent to strong once you build the processes and capabilities? S&P said the units’ ratings — which were lowered one notch to AA- from AA, or three steps under the highest rating…

Read more »

KPMG: 10 Common ERM Challenges

March 27, 2010

Risk Management magazine just published an article by Jim Negus (of KPMG LLP’s risk and compliance services group) listing their top ten ERM challenges. They write: Very few organizations find enterprise risk management implementation easy–it requires a rare combination of organizational consensus, strong executive management and an appreciation for various program sensitivities. Despite the effort required, however, ERM is worth it because it forces most organizations to step back and identify their risks, which is one of the first steps to protecting capital and driving shareholder value. As boards and executive management evaluate ERM, however, they usually come away with…

Read more »

Economist: Toyota’s overstretched supply chain

March 5, 2010

Here is a very good story about Toyota, it’s supply chain and managing its risks, from the February 25, 2010, issue of The Economist. http://www.economist.com/business-finance/displaystory.cfm?story_id=15581072 In light of its recent troubles I am not really troubled by Toyota. Perhaps I should be, but I am not. I have a Toyota and would likely buy another one before I even look at GM, Ford or Chrysler. Of course Toyota made some mistakes – but I know enough about Lean Six Sigma to know that defects will happen. So while Toyota’s grades have fallen from A+ to A- or B+, I still…

Read more »

Risk in the 1960s

March 5, 2010

I’ve just started watching the AMC show Mad Men on DVD. (Yes, I know, I am three seasons behind.)  And while I was aware that the show was set in 1960 in New York ad agency world, I had no idea there was so much risk going on back then. So much smoking, hard drinking and drunk driving. Everyone smokes. All the time. Even the gynecologist was smoking in the examination room. In the first episode, our ad man is trying to come up with a campaign for, well, you guessed it, cigarettes. To complement the smoking, there is lots…

Read more »

Jihad risk

March 5, 2010

I read recently that Libyan leader Colonel Muammar Gaddafi has called for Muslims to declare a jihad against Switzerland. Apparently this is the result of a Swiss ban on minarets (tall spires) in the construction of mosques and nothing to do with one of Gaddafi’s son’s being arrested in 2008. Nothing. The Colonel also noted that he would invade Switzerland if the two shared a common border. Lucky thing for the Swiss. This got me wondering if any risk managers in Switzerland are losing sleep over this. If you were a CRO at a Swiss bank, watch manufacturer or cheese…

Read more »

ERM in manufacturing

March 3, 2010

Here’s an article we do not see very often (read: never). Joseph Allred, a CPA from Texas, writes about the value of ERM in a manufacturing organization. Although the content is consistent with what many of us often write about, I found it refreshing to focus on a non-financial for a change. The author does articulate his points nicely about the difficulty implementing ERM: ERM has been difficult to implement primarily because organizations approach it as a massive project. Initially, combining distributed risk management efforts is a big job. It takes time to migrate from the old risk-management model that…

Read more »

CFOs and risk management are just friends

March 2, 2010

According to a study based on conversations with almost 2000 global CFOs (that includes 17 of the DJIA companies), they love risk management. (Well maybe “love” is a strong word; maybe saying CFOs and risk management are “friends” is better.) According to Bill Fuessler, who co-authored the study, CFOs “are moving away from their transaction activities–and paying more attention to the integration of data” and ” the CFO position has evolved into a much more strategic role as they take on more involvement with risk management.” (Maybe “friends” is also too strong a word. Maybe it is more accurate to…

Read more »