Scope for the Project:

1.) Risk Management in general

2.) ERM Framework
3.) Risk analysis tools mitigation
4.) Benchmarking ERM practices
a. Organizational structure
b. Risk Appetite
c. Risk Management Process
d. Data Management & Risk Reporting
5.) ERM Maturity Level Model
6.) Firm Analysed for Risk Management Process: Volkswagen Group,
Wal-Mart, ArcelorMittal, Infosys, Tata Power, Tata Steel.
7.) Recommendations.
8.) References.

1.) Risk Management in General: - The process of risk identification,

analysis and either of acceptances or mitigation of uncertainty in
investment decision-making.
Inadequate risk management can result in severe consequences for
companies as well as individuals. For example, the recession that began in
2008 was largely caused by the loose credit risk management of financial
firms.
Risk management Process is described as a series of 7 steps through
which risks are identified and addressed, as described below:
Step 1: Establish the context: Set Objectives, set evaluation criteria.
Step 2: Identify risks: Identify/describe risks relating to the objectives,
identify the consequences; identify the risk sources; including existing
controls or strategies to address risks.
Step 3: Analyze Risks: Assess the probability and likely consequences of
the risk after taking into consideration the effectiveness of current
controls. This will ascertain the residual level of risk exposure.
Step 4: Evaluate Risks: Compare listed risks against criteria, set priorities,
and determine whether to avoid, treat or accept.
Step 5: Treat Risks: Determine options and implement action to treat the
residual risk.

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Step 6: Monitor and review: Continually monitor the achievement of

actions.
Step 7: Communication and Consult: Ensure feedback loops and key
group input.

2.) ERM Framework: ERM framework consists of five main different

elements:
a Organizational structure & Governance
b Risk Management Processes
c Risk Analytics
d Reporting
e Information Management/Data Governance
Every elements of framework describes the every dimension of an
organization or process, from operational level to the responsibility,
organizational hierarchy. In overview, it is the guideline for any
organization or process.
3.) Risk analysis tools & Mitigation: Risk analysis tools helps to identify,
continuous monitoring and mitigate the risk events from the first
place. Few in trend risk analysis tools are following:
a. Impact/ Likelihood Analysis
b. Risk Score/ Risk Impact
c. Heat map
d. Risk Matrix
e. PERT Analysis
f. Monte Carlo Simulation.
g. Probability Analysis.
4.) Benchmarking ERM practices: Evaluated the different firms
(Volkswagen Group, Wal-Mart, ArcelorMittal, Infosys, Tata Power, and
Tata Steel) on the basis of different parameters, which an ideal firm
should follow. The following are parameters, on the basis of which I
evaluated the firms:
i. Organizational Structure
ii. Risk Appetite
iii. Risk Management Process
iv. Data Management & risk reporting
There are other many sub-parameters, which are discussed in the
project report in depth.
5.) ERM Maturity Model: I took the Deloitte Risk Management Maturity
Model as a reference to measure the maturity level of the firms in my
project report.

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a. Level 1: Some stand-alone risk management processes have

been identified.
b. Level 2: Risk Management processes are being developed
and rolled out in a part of the organization.
c. Level 3 (Infosys Ltd., Tata Steel, and Wal-Mart) : Structured
framework, drafted objective, policy & standards.
i. Risk Management processes implemented broadly and
is being consistently applied throughout (or at least in
its key areas).
ii. Functions have ownership of risks within their operation
d. Level 4(Tata Power, Volkswagen): Risk Management
processes are part of decision making and daily operations.
Risk metrics are collected and are used as a measure risk/
reward balance.
i. Enterprise-wide risk monitoring, measuring, and
reporting
ii. Technology implementation
iii. Risk mgmt. training
e. Level 5 (ArcelorMittal): Management of risk and
uncertainty is integrated with all business processes, real time
review and improved.
i. There is ongoing use of triggers (EWIs) and
monitoring(KPIs), and management is informed the early
stages of potential risks and has practical tools to act in
accordance with the risk profile.

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6.) Conclusion/ Recommendations:

Category
Board Risk
Committee
Risk Profile
Risk
Identification

Sub-Category
Recommendations
Board Risk
Establishment of Drafted Board risk charter
Charter
Periodically assessment of risk validation and
Frequency of
significance. Online portal may be a tool to do this
Validation
activity.
Online Survey

Development of online portal

Development of online portal for risk survey workshop,

risk registering, risk analysis, frequency analysis, etc..
PERT Analysis can be used as a analysis tool for
PERT Analysis
estimate calculation.
Risk Analysis
Probability
Probability Binomial can be used as a analysis tool for
Binomial
evaluate the probability of an event and frequency.
Risk Correlation Risk vs. Output
Cost Benefit
Estimation of mitigation plans, Cost & Benefits of
Analysis
mitigation plans and time, resources requirement.
Risk Response Auditing for
Periodically assessment of validation of KPIs.
Methodology KPIs
Auditing of RM Quarterly or bi-annually or annually performance
team efficiency monitoring
Drafted Data Ownership policy, it'll reduce the
Data Ownership
confliction.
Data Policies &
Data
Drafted Data policy, it'll reduce the confliction.
Standards
Governance
Risk and
Finance Data
Complete integration with the financial data
Integration
Real time
reporting to the
Development of online portal
relevant
Risk Reporting stakeholders
Development of report sheet, likewise, mitigation sheet,
Types of
risk matrix, Risk analysis sheet, frequency analysis
Reports
sheet, risk aggregation
Develop a risk directory
Assign a unique alpha number code to the individual
risk
Maintenance of call log every individual which will
Miscellaneous Miscellaneous record the past history of the risk event, and depict s
the likelihood & estimate the cost. Call log will help to
develop a frequency analysis report.
Awareness about the risk ownership by training
sessions.
online Portal

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