Essay on Honeywell Case Study

1198 Words May 29th, 2013 5 Pages
Honeywell, Inc. and Integrated Risk Management

Case Analysis

Submitted to: Prof. A. Kanagaraj

By Vivek Gupta
Section C, 944

Executive Summary:
Honeywell was a multibillion-dollar, International Corporation employing 53000 people and managing operations in 95 countries. It was the largest producer of control systems and products used to regulate heating and air conditioning in commercial buildings and of systems in avionics systems. Carrying out business in 95 countries firm faced a number of risks. Honeywell’s risk management activities were dispersed throughout the firm as shown in the table. Other risks were managed operationally.
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The integrated risk management program was a multiyear insurance based strategy that covered all traditionally insured risk and currency translation risk in a single master insurance policy. The proposed program had one time annual aggregate retention of $30 million, rather than a separate retention for each individual risk. The program subject to a maximum payout of $100 million over the two one-half year term of the policy and also have an excess coverage subjected to a maximum pay out of an additional $200 million. While traditional insurance was viewed as a business necessity, the integrated risk management concept had not yet reached such a degree of acceptance by the broader business community.

Problem Statement:

Honeywell was the first to introduce an integrated risk management program that combined traditionally insured risks with other risks in an insurance contract. This case identifies the benefits of integrating risks and shows how such an approach might be valuable. Honeywell has diverse variety and variant degree of risks. Given this, how should its risk be managed?

|Type of Risk |Department Handling Risk |
|Traditionally Insured (i.e. Hazard) Risks |Treasury - Insurance Risk Mgmt. Unit |
|Currency Risks |Treasury - Financial…

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