The hypothetical case study is presented as an illustration of how the Enterprise Risk Management assessment tool can be used by CGMA designation holders to assess the effectiveness of an organisation’s approach to enterprise risk management.
The case study shows the process the GMS Chief Financial Officer, Davi Cruz, and his team used for using the assessment tool to determine if their organisation had an effective ERM process. The eight areas of focus listed below were considered to be important dimensions of an effective ERM process.
- Risk Culture
- Risk Identification
- Risk Assessment
- Articulation of Risk Appetite
- Risk Response
- Risk Reporting
- Integration with Strategic Planning
- Assessment of ERM Effectiveness
In each of the eight focus areas, the case study includes brief descriptors of key elements of an ERM process that are important to the strength of that focus area and a discussion on the evaluation. The team considered whether each of the key elements was currently present at the organisation at the time of the evaluation.
In total, there were 75 elements that the team used in assessing the organization. The 75 elements were easily answered as either being present or absent in their current ERM practice.
Raw scores, in addition to a percentage score, were developed for each of the eight focus areas. In the summary section, the team tallied the raw scores and percentage scores from each of the eight focus areas to create an overall score for the organisation. The overall score was used to provide feedback about the relative maturity of the organisation’s ERM processes. Percentage scores for each of the eight focus areas will be used to provide the organisation some direction about specific aspects of ERM that may require the most immediate attention.