EBIT for UGG's Business Segments (rig 4y Grain Handling proceeds Highly volatile, Why? EBIT 35,000 30000 Grain Handling $25,000 Crop Production g920.000 Services $15,000 Livestock 6$10.000 Services 5,000 -* Business Communications s60019 1990 199219941996 1998 Year
6 EBIT for UGG’s Business Segments (Fig.4) EBIT $(5,000) $- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 1988 1990 1992 1994 1996 1998 Y ear C$ (in thousands) Grain Handling Crop Production Services Livestock Services Business Communications Grain Handling proceeds Highly volatile, Why?
The erm process Formed a rm committee CEO, RM, CFO, Treasurer, Manager of Audit Services brainstorming session )Willis analysts, RM committee, other employees dentified 47 main risks Six risks were chosen for further investigation Environmental liability Effects of weather on grain volume Counter-party risk ) Credit risk Commodity price and basis risk )Inventory risk
7 The ERM Process Formed a RM Committee CEO, RM, CFO, Treasurer, Manager of Audit Services Brainstorming session Willis analysts, RM committee, other employees Identified 47 main risks Six risks were chosen for further investigation: Environmental liability Effects of weather on grain volume Counter-party risk Credit risk Commodity price and basis risk Inventory risk
Frequency of Losses from Counterparty R 074 Example of 0o0 0 Number of Losse 13 Analysis of Severity of Losses from Counterparty Risk each of the Loss Severity 0002,000,000 6000,000 4,000000 8.000,000 Six Risks: Figure 27. 3 Total Losses from Counterparty Risk Counterparty 025 Total Annt Risk 000 0.00875,0001,750,0002625,0003,500,000 Figure 27. 3D EBIT with and without Counterparty Risk 015 00015000.00 45.000.00 30.000.00 60.000.00 With Counterparty Risk Without Counterparty Risk
8 Example of Analysis of each of the Six Risks: Counterparty Risk