The Chicken or the Egg: A study of Risk Management and Strategic Planning

Presented by Raven Henderson

Raven Lane, LLC

Raven Henderson, CPA, CIA, CFSA

www.ravenhenderson.comraven@ravenhenderson.com571-283-1878

Learning Objectives

Understand the relationship between Risk Management and Strategic Planning

Learn tools to apply internal and external risks in a strategic analysis to help build better strategic plans

Examine Enterprise Risk Frameworks, Strength, Weakness, Opportunity, and Treats (SWOT) techniques, and Risk Management concepts

What is Risk?

Identify Risk Events

What could go wrong?Who could we fail?Where are we vulnerable?What resources do we need to protect?What must go right for us to succeed?How could our operations be disrupted?How do we know if we are achieving our

objectives?

Identify Risk Events

What information must we rely on?What decisions require the most judgment?What activities are the most complex?What activities are regulated?What is our greatest legal exposure?How could someone convert assets?How successful will be at managing change?How will we retain critical resources?

What is Risk Management?

The Tools:

ERMSWOTRisk Management Concepts

COSO ERM

Enterprise risk management is a process, effected by an entity’s board of directors, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives.

COSO ERM

SWOT Matrix Opportunities (External Analysis)

Threats (External Analysis)

Strengths (Internal Analysis)

SO StrategiesCapitalize on internal strengths to maximize opportunities.

ST StrategiesDraw on internal strengths to reduce external threats.

Weaknesses (Internal Analysis)

WO StrategiesOvercome internal weaknesses to maximize opportunities.

WT StrategiesReduce internal weaknesses to guard against external threats.

SWOT Analysis

Risk Management Checkpoints

Management Policy– Soundness, rationality, and integrity of policy

– Clarity and permeability of policy

– Understanding of risk management

– Basic strategy for risk management

– Diversification of risks

– Countermeasures for identified risks

Internal Control– Organization, delegation of authority, and reporting

– Separation of responsibilities

– Staff recruiting and training

Risk Management Checkpoints

Profit and Loss Management– Monitoring– Distribution of resources– Pricing– Competition

Compliance and Disclosure– Management understanding of legal compliance and

action to achieve it– Establishment and implementation of a framework– Actively disclose financial information and restraints

Contingency Plan

Words of Caution:

Don’t do these by yourselfDon’t use these for the next 10 yearsDon’t expect these to provide all the

answers

Questions?

raven@ravenhenderson.com 571-283-1878