ERM Study Notes Essay

8310 Words Feb 22nd, 2014 34 Pages
8/26
Chapter 1 – To Survive and Thrive
1. What is an unintended consequence of shorter CEO tenure relative to decades earlier?
The unintended consequences of shorter CEO tenure are this can make the CEO overly risk averse. It makes CEO decisions more conventional and less risk taking is involved. Also CEO’s focus more on short-term goals than long term.

2. What are some barriers to the board’s effectiveness in risk oversight?
Boards members rarely have an understanding of key enterprise strategies or risks. They have no clear sense of their companies’ prospects 5 to 10 years down the road. They have limited time, lack of industry specific expertise and different definitions of success that prevent them from successfully performing
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It matches the reject, consider, and accept elements of the predictable process.

8. What’s the message related to risk management that comes from all the focus on the reality of assumptions?
We cannot assume all risks will be normal, we have to expect uncontrollable events. We cannot we have all the assumptions so must continually evaluate our risk management.

9. What’s the flaw of accepting the notion of “ceteris paribus” when analyzing a strategy?
Ceteris paribus stands for “all things being equal.” The flaw of accepting “ceteris paribus” is that it is not true in all cases, and the world is complex and changing and so all things are not equal.

10. What is a black swan event?
Black Swan events are rare, random, and high impact events.

9/4
New Strategies for Managing Risks: A Balancing for Boards by Stephen Pelletier
1. What factors motivated Duke to rethink its approach to risk oversight?
Hiring of Michael L. Somich, Former Partner at Deloitte and Touche
Lacrosse Incident
Overbilling Medicare in some clinical trials

2. What role has the board played in driving change to Duke’s risk oversight?
Challenged management to be more involved in risk oversight

3. Who ultimately owns risk at Duke? Why is that critical?
The board and top-level executives own risk at Duke. This is critical to know because they have to know they are responsible to have an urgency to protect Duke from risks.

4.

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