1) The area of corporate governance is in charge of the internal controls that protect the stakeholders from self-interest behavior inside of a company (shareholders). Likewise, the risk management evaluates and detects anticipated events that could impact negatively in the objectives of the company. This gains the trust of investors, employees, customers and suppliers (stakeholders), which willcontinue to invest, buying and providing services to the company. Therefore, have an enterprise risk management are inside the company is part of corporate government in order to ensuring no conflicts in objective and own interests. Actually, the most important stock exchanges incorporated like a requirement that if a company want to be a public company, it need a enterprise risk management area.Hydro One wanted to become a public company so they incorporate an enterprise risk management with the vision of have the best safety record in the word. 2) Risk is an unknown event that threatens the achievement of the company’s strategic objectives and thus diminishes the opportunity of gain. Hydro One adopt a three-phase program of enterprise risk management, in which in phase one the staffparticipated in workshops to understand the main strategic objectives of the company and the risks to their achievement. Before these workshops the risk team elaborate a list with 60-70 potential risks and e-mailed to the participants asking for choose the critical ones that affects their projects. In the second phase the company allocates resources to solve the indentified risk and in the last phasethe chief risk officer conducted a series of one-on- with senior management to review the corporate risk profile. On another hand, the magnitude of the risks refers to the level in which this can impact and affect in the company. Hydro One prioritizes the “Very High” and”High” risk and begin to allocate their resources in them. For example, the employee accidents represent a high risk for thecompany because the extremes weather put in danger the life of the workers. 3) Is the disaggregation of a risk in a generally radar because the systems to detect and manage the risk are not enough. In this phase, the risk committee analyzes the deviations associated to the routine patterns of activity which reduce intelligent risk processing. In order to achieve this, the company must have clearobjectives. Example: the underestimation of the increase of the bad reputation for a company. At the beginning, when medias start to talk about bad behavior of the company, this one could not pay attention on it, continuing to
do its previous activity, but in the long run it could become a serious problem with customer that could start to prefer a competitor or employees that don’t feel part ofthe company itself. In this case, the company has to focus carefully on the problem trying to don’t lose market shares and its competitiveness. 4) Before the workshop, the ERM team sent to the managers who will take part a list of about 60 possible risks and which must choose a maximum of 10. This first vote serves as a filter to identify the most important risks. Also, as this vote involvesmanagers from different areas ERM takes all types of risks associated with several internal objectives. The management vote is really relevant because this will determine where Hydro One will allocate their resource to diminish the identified risks. Likewise, in order to prepare the Corporate Risk Profile report, chief risk officer besides the risks workshop, interviews twice a year 30 or 40 topexecutives to know the managerial assessment of the identified risks and possible emerging risks. 5) Explain the purpose of the workshops in the Enterprise Risk management process. The workshops serve to develop a collective understanding of the main objectives of the company and the various risks that threaten it. This is very important as it helps to clarify the objectives that sometimes in the day to...
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