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Presented by:

Erike Young, MPPA, CSP, ARM

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I would like to thank the following organizations for sponsoring the course, which allows their employees/members to have the registration fee waived: ◦ University of California, ERM University

◦ University Risk Management & Insurance Association

◦ American Society of Safety Engineers

◦ Golden Gate RIMS

◦ Sacramento RIMS

◦ Alliant

◦ Bickmore Risk Services

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Instructor: Erike Young

Participants

◦ 90+ participants

Higher Education

Hospitals

State/local government – Risk Pools

Insurance

Consulting

Manufacturing

Locations

◦ Alaska to Maine

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Course Schedule

• 2/13 Introduction and Chapter 1

• 2/20 No Class

• 2/27 Chapter 2&3

• 3/6 Chapter 4

• 3/13 Chapter 5

• 3/20 Chapter 6&7

• 3/27 Chapter 8

• 4/3 No Class

• 4/10 Chapter 9

• 4/17 Chapter 10

• 4/24 Chapter 11&12

• 5/1 Course Review

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Recordings

• For those who cannot attend the live presentations, each

webinar will be recorded and typically posted for viewing

within 24 hours. I know that due to the different time

zones, these recordings are important will get them

posted as soon as possible. In some cases, it could be

within several hours. The recordings will be made

available both on a secured YouTube channel and

available for download. Please note that if downloading,

the recordings are approximately 60 mbs each.

• Each participant will use their email to login at

www.armstudygroup.com to access the material.

Scheduling the Exam

65 Multiple Choice Questions – 2 Hours

72.02% pass ratio

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Structured Review

How to make the most of this review:

• Take notes in course guide, but don’t waste

effort copying slides. (Slides are be available for

download)

• Questions are important. Yet time is limited to

cover all of the material.

• Goal is to cover all chapters in 10 weeks –

average of 1 chapter per meeting

• The primary purpose is to pass national exam.

Studying the Material

• Educational Objectives

• Terms and Phrases

• Text Exhibits

• Chapter Summary

• Optional

– Course Guide Review Questions

– Course Guide Application Questions

SUGGESTION: Read the Educational Objectives in

the course guide BEFORE reading the text.

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Studying the Material

• Have an answer for ALL Educational Objectives

• Review all exhibits

• Use same terms and phrases – (EX: The text has 4 Pre-Loss Goals and 6 Post-Loss Goals;

then so do you!)

– This course requires memorizing content, not creating NEW examples.

– Use acronyms to keep the lists separate.

• Test questions frequently interchange information..

SUGGESTION: Divide material in the text and course

guide into units for EVERY Educational Objectives.

Introduction to Enterprise Risk Management

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ERM Definitions ◦ Textbook Definition - An approach to managing all

of an organization’s key business risks and opportunities with the intent of maximizing shareholder value. Also known as enterprise-wide risk management.

◦ ISO – Coordinated activities to direct and control an organization with regard to risk.

Risk – the effect of uncertainty on objectives

◦ Erike’s simple definition – purpose of ERM is to address risks that prohibit an organization from achieving its mission/strategic objectives.

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All ERM definitions include concept of managing organization’s risk to help meet its objectives ◦ Everyone is a Risk Manager

UC Irvine Risk Summit Video ◦ http://youtu.be/O_-gOPFhYcQ

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Interdependency ◦ Traditional risk assumes risks are unrelated

◦ ERM tries to breakdown silos of management

Correlation ◦ Correlation increases risks

◦ Location of suppliers – (ie Japan)

Portfolio Theory ◦ A portfolio is a combination of risks and their

interactions with other risks

Traditional Structure ◦ Risk manager/risk management department manages

associated with accidental losses and/or insurable risk

◦ Mainly function is to transfer risk – insurance

◦ May include claims management function

ERM Structure ◦ A holistic view of risk that is much broader and includes all

potential risks both internal and external

Operational, Financial, Compliance, Reputational, Hazard

◦ CRO responsibility includes creating a risk culture in which everyone becomes a risk owner

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Must have ◦ Senior leadership support

◦ Enterprise Risk Data

◦ Risk management process integrated

◦ Risk managers with authority to make and enforce changes

◦ Effective communication

Impediments to ERM ◦ Technology to share date across system – dashboards

◦ Blowing up silos

Risk management buys insurance

HR is responsible for benefits

Finance manages investments

Operations manages production

Safety function focuses on compliance

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Subjective risk ◦ Perceived amount of risk based on an individual’s

or organization’s opinion.

Objective Risk ◦ The measurable variation in uncertain outcomes

based on facts and data.

The closer an organization’s subjective interpretation of risk is to objective risk, the more effective its risk management plan will likely be.

Reasons for difference in risks ◦ Familiarity and control

Air travel vs driving cars

◦ Consequences over likelihood

Zero probability vs. low probablity

“It can’t happen to me”

Overstating low probability event

Can be due to media event or knowing someone that it happened to

◦ Risk Awareness

Ostrich defense

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Diversifiable Risk ◦ A risk that affects only some individuals, business,

or small groups

Building fire affects several buildings

Nondiversifiable Risk ◦ A risk that affects a large segment of society at the

same time

Earthquake, hurricane, flood, mortgage industry

Focus on source of risk and who manages the risk

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The Expanding Risk

Universe

While reducing the Cost of

Risk is one of our primary

goals, we are also charged

with ensuring that University

faculty, staff, students,

guests, operations, and

assets are appropriately

provided proper protection in

case of an adverse event.

Our development of

programs to provide this

protection is as diverse as

the University itself, and

changes and grows as the

University does.

Workers’

Compensation

General

Liability

Auto

(Bodily Injury)

Professional

Liability

Foreign

Liability

(Enhanced)

Aviation

Marine

Employment

Practices

Property

Library

Fine Arts

Boiler &

Machine

Builders

Risk

Crime

Indentured

Property

Cargo

Human Subject

Injury

Marine

Pollution

Terrorism –

Property

Be Smart About

Safety (WC)

Auto

(First Party)

Terrorism

– GL & PL Travel

(Enhanced Program)

Threat & Security

(Special Risk)

Mortgage

Impairment

Be Smart

About Safety

(GL, Prop, Auto)

Foundations,

Alumni, &

Support Groups

Cyber & Privacy

Liability

Environmental

Pollution Liability

Recreation &

Club Sports*

Licensing Board

Representation

Threat &

Security

(Enhanced)

Directors &

Officers

Registered Student

Organizations*

Tenant Users

Event Liability*

Recognized

Sports Club* Camps &

Clinics*

Vendors &

Contractors* University Controlled

Insurance Program

(Construction)

Fiduciary

2004 2010

*Part of CampusConnexions

Internal Drivers ◦ Recognition that risk management failures could

threaten organization’s reputation or survival

◦ Understanding that you can exploit/optimize risk

◦ Main functions

Protect an organizations assets

Promote future growth

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Internal Drivers ◦ ERM enables an organization to analyze the effect

of it risks on financial results and to select a level of risk based on its risk appetite and risk tolerance

Risk Appetite – The total exposed amount that an organization wishes to undertake on the basis of risk-return trade-offs for one or more desired and expected outcomes

Risk Tolerance – The amount of uncertainty an organization is prepared to accept in total or more narrowly within a certain business unit, a particular category or for a specific initiative.

External Drivers ◦ Legislation

◦ Regulatory requirements

◦ Risk management standards

◦ Credit rating agencies

◦ Investors

◦ Social responsibility

◦ Catastrophic events

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High-profile failures ◦ Enron and Arthur Anderson

Led to Sarbanes-Oxley Act

◦ Mortgage underwriting

Consumer protection bureau

◦ BP and Deepwater Horizon oil spill

European failures/response ◦ Solvency II

◦ Basel III

Technology, Globalization and Finance

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Major values of ERM ◦ Improve strategic decision making

◦ Anticipate risk and minimize threats

◦ Improve business performance

◦ Comply with legal and regulatory requirements

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Improve strategic decision making ◦ Address threats and optimize opportunities

◦ Align risk appetite with risks in a major decision or direction

Anticipate risk and minimize threats ◦ Anticipate and recognize emerging risks (nano-

technology)

◦ Identify and manage cross-enterprise risks

◦ Minimize threats to achieving organizational goals

◦ Enhance risk-response decisions (UC BSAS Program)

Improve business performance ◦ Improve credit rating

◦ Reduce earnings volatility

◦ Seize opportunities

◦ Improve business resiliency and sustainability

◦ Improve risk governance

◦ Improve capital allocation

Comply with legal and regulatory requirements ◦ Sarbanes-Oxley

◦ Dodd-Frank