Chapter 18 presented special risk management issues with Blue Wood Chocolates, and chapter 19 presented various financial risks at Kilgore Custom Milling.
1) If Blue Wood Chocolate and Kilgore Custom Milling are to develop a risk management framework, who should lead the process at each company?
2) Should a Chief Risk Officer (CRO) be appointed? If so, to whom should he/she report and have access to?
3) How could smaller companies without the resources for a dedicated CRO deal with ERM?
4) How does this relate to your research project for the course?(attached textbook)
sai rahul – According to the text provided in the book, Blue Wood Chocolates should appoint an operation manager who would help study and correct the risk management issues it faces. As for Kilgore Custom Milling Company, all financial risk frameworks should be professionally managed by the Chief Financial Officer (Fraser, Simkins & Narvaez, 2014). Financial risk managers are specialized in designing and determining financial frameworks that relate issues about reporting as well as carrying out balance sheets with professionally refined financial statements (Fraser et al., 2014). For all the risks in both the two Companies, the Chief Risk Officer should attend to their risk issues. This is because the CRO could be an umbrella that could be answerable to the CEOs for each company.
Small and medium-sized companies are well known for low financial capabilities as well as resource struggle in general (Fraser et al., 2014). They do not have sufficient resources to fund the Chief Risk Officers who are professionally trained to deal with risks of management nature. However, being in a lack of position does not guarantee them to be silent and doing nothing about addressing the risks it faces (Fraser et al., 2014). For that reason, a risk diverse culture for such an organization can perfectly be addressed by the insurance company. Besides, insurance companies have clearly defined policy ratings that control certain activities from being acted upon, ranging from compliances and requirement levels.
Specifically, liability insurance is the best risk levels that can be attended to by the insurance companies (Fraser et al., 2014). This would shield SMEs because it provides policies that can guide a financial as well as the managerial plans for a specific organization (Fraser et al., 2014). This topic adds to my research project in many ways. Learning about risk management will help me to address all managerial problems by appointing an operation manager (Fraser et al., 2014). Also learning best practices for a small company would help me introduce an idea of having liability insurance that would shield our resource management programs.
Ganga – When Blue Wood Chocolate and Kilgore Custom Milling are supposed to create risk management framework, the blue wood chocolate, and Kilgore custom milling should come up with a hazard the executive system .CFO should lead the process with the fact that the executive system should become a way in creating strategies will improve the organization hazard. The system will hold a partner meeting with the known individuals who are linked with the process because they can provide each data concerning the procedure (“Front Matter,” n.d.). The system will guide the business, foresee the dangers that might arise, and find a way to stop the dangers available.
As far as the current money of the associations is concerned, Chief Risk Officer is responsible for answering to the higher administration of the organizations for the encouragement behind in assuring that the work done by the business is effective and impressing. CRO ignores important jobs by assuring that the dangers existing in the organization are eliminated (“Front Matter,” n.d.). After solving all the dangers in the organization and to the top administration of the business, it will be easier to set up measures to assure that the organization goes as expected.
After selecting the CRO, he or she will report to the chief executive officer and the governing body. The CRO will take charge of the important information and any money related data and provide an account of executive processes and give the CEO and the board or rather directly to the CEO (“Front Matter,” n.d.).The administration will lead the ERM in small organizations without liability for a devoted CRO. Small organizations that will not be at the cost of assets the executive system would utilize the money for the hazard that could lead to utilizing the mastery of CFO.CFO will provide judicious monetary control. The system will ensure that the business is well organized and well protected by predicting dangers likely to come over.
- Blue Wood Chocolate and Kilgore Custom Milling are two business organizations that have not started to work with a proper ERM strategy in place. In case both these companies would have started with an ERM strategy in the first place, the business operations could have acted as a guide to for the process of designing and developing an ERM strategy (Fraser et al., 2014).
- Appointing a Chief Risk Officer could certainly have been a very nice strategy for the organizations in order to develop their ERM design. The CRO could be a member of the company or a professional who comes from the external environment. In either cases, he or she should report to the senior managers of the company, ideally the COO, for any doubts and progress reports (Fraser et al., 2014).
- Developing a detailed literature for the ERM framework at a small scale company can help the organization in developing an ERM strategy without a CRO. The companies can develop a detailed list of their operations which can help in identifying the associated risks. Once the risks are identified, strategies can be developed to deal with these risks. In the absence of a CRO, engaging representatives from each department of the business can prove to be a great idea for developing an efficient ERM strategy (Fraser et al., 2014).
- The research project that I am taking up for this course is directly related with the ways in which organizations make assessments of their risks and develop strategies and solutions that can help in eliminating those risks. Reading the chapters has helped me to gain a complete knowledge of the process and has also helped me to identified the ways in which the process can vary in different types of business organizations. I can use this knowledge to approach the research problem in a more subjective way and develop a good research paper (Chen et al., 2019).