ed Grain Growers Enterprise Risk Management. A Case Stud More about erm CasErmWebsitehttp://www.casact.org/arealerml SOA CERA Credential http://ww.ceranalyst.org/overview.asp RIMS ERM Center http://www.rims.org/resources/erm/pages/default.aspx Wikipedia: http:/en.wikipediaorg/wiki/enterpriseRiskManagement
1 United Grain Growers Enterprise Risk Management: A Case Study More about ERM CAS ERM website: http://www.casact.org/area/erm/ SOA CERA Credential: http://www.ceranalyst.org/overview.asp RIMS ERM Center: http://www.rims.org/resources/ERM/Pages/default.aspx Wikipedia: http://en.wikipedia.org/wiki/Enterprise_Risk_Management
Enterprise Risk Management Traditional approach Manage each type of risk separately(silo approach) a Enterprise risk management approach Manage all risks in a unified framework Focus more on overall firm risk Some firms have established a new position chief risk officer
2 Enterprise Risk Management ◼ Traditional approach: Manage each type of risk separately (silo approach) ◼ Enterprise risk management approach: ◼ Manage all risks in a unified framework Focus more on overall firm risk Some firms have established a new position: chief risk officer
Enterprise Risk Management Arguments for ERM ) Process provides managers with a better understanding of the firm's risks Many of the reasons for managing risk suggest looking at an aggregate performance measure(e.g, cash flows) Arguments against ERM )Too costly to implement
3 Enterprise Risk Management ◼ Arguments for ERM: Process provides managers with a better understanding of the firm’s risks Many of the reasons for managing risk suggest looking at an aggregate performance measure (e.g., cash flows) ◼ Arguments against ERM Too costly to implement
United Grain Growers case a UGG was one of the first to use erm ■ Background on UGG >Operates in western canada Provides services to farmers Governance structure: Members and Shareholders )Main business: grain handling )Capital expenditure program: replace old grain SIlOS Recently increased financial leverage
4 United Grain Growers Case ◼ UGG was one of the first to use ERM ◼ Background on UGG: Operates in western Canada Provides services to farmers Governance structure: Members and Shareholders Main business: grain handling Capital expenditure program: replace old grain silos Recently increased financial leverage
UGGs Business Segments Operates in western Canada Livestock Services Grain Feed mills Crop Handling Production ALarm Services Marketing Production Planning Fertilizer Country Terminal End -herbicides Elevator Elevator Users Seed Communications
5 UGG’s Business Segments Crop Production Services -Fertilizer -herbicides -Seed Livestock Services - Feed Mills Communications Grain Handling A Farm -Marketing -Production -Planning Country Elevator Terminal Elevator End Users Operates in western Canada