Enterprise Risk Management: A Comprehensive Overview

The assignment delves into the multifaceted world of Enterprise Risk Management (ERM). It examines various theoretical frameworks, practical tools for risk analysis and mitigation, and the importance of ERM in diverse industries. The provided case studies and research articles offer insights into real-world applications of ERM principles, highlighting the challenges and opportunities associated with managing risks in today's complex business environment.

Enterprise Risk Management
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TABLE OF CONTENTS
KEY FOR RISK REGISTER..........................................................................................................3
RISK MATRIX................................................................................................................................3
THREAT..........................................................................................................................................4
OPPORTUNITIES.........................................................................................................................21
REFERENCES..............................................................................................................................24
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KEY FOR RISK REGISTER
Likelihood Impact
-1 Positive impact
0 No impact
1 Very Unlikely 1 Negligence impact
2 Unlikely 2 Low impact
3 Likely 3 Moderate impact
4 Very likely 4 High impact
5 Almost certain 5 Catastrophic impact
Risk Score Classification Mitigation
x<1 Opportunity No If score is 1 or under 1, then as per
Volkswagen system, the factor will
be considered as the serious
opportunity. It will provide strategic
advantage to the organization and
lead business to impressive level of
success.
1 to 5 Negligence Risk No Any risk which is scored under 15
will not be referred as high risk so it
will not require any mitigation. In
this, Volkswagen system will have
acceptance of threats and negative
risks, if they are under acceptable or
tolerable standards (Aebi, Sabato,
and Schmid, 2012).
5 to 10 Low Risk No
10 to 15 Moderate Risk No
15 to 25 High Risk Yes If risk is equal to 15 and or above it
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then it will be considered as the high
risk so it will require mitigation plan.
Risk will be considered as an
intolerable aspect.
RISK MATRIX
Relative
Impact
Catastrophi
c impact
High impact
Moderate
impact
Low impact
Negligible
impact
No impact
Low Medium
low
Medium Medium
high
High
Relative impact
THREAT
Risk Explained Likelih
ood
Impact Risk Rating Mitigation
1. Research
and
developmen
t risk
It has been
noticed in risk
evaluation
process of
Volkswagen
Group that risk
5 4 20 In order to overcome the
risk, management of
Volkswagen Group can
effectively identify the
market trends and
customer needs by
4

and development
risk may affect
the business in a
diverse manner
(Bartak and
Ghosh, et.al.,
2015). Customer
needs are
changing on the
rapid basis so it
is one of risk for
division while
developing new
product. For
example, the
company is
looking forward
to introduce new
product but the
customer needs
has changed. It
will force
management of
Volkswagen
Group to change
its process in
regard to
research and
development. It
also increases the
cost of operation
focusing on customer
surveys and scouting
process. It is significant
for the management to
ensure about user needs
while developing new
product so that issue can
be overcome in an
appropriate manner
(Chitakornkijsil, 2010).
Along with this, the
effective monitoring
process also needs to be
developed so that market
trends can be monitored
on a regular basis. It is
also necessary for
management of
Volkswagen Group to
make sure that the changes
in process are being taken
into account as per the
original target. Company
can also have effective
involvement of customers
in process by allowing
them to visit the
assembling plant.
Collective working with
customer views is also
beneficial to improve the
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so it is
considered as
one of the vital
risk which
affects the
business of
Volkswagen
Group.
effectiveness of process
which will help in
overcoming risk in respect
to research and
development program
(Aebi, Sabato, and
Schmid, 2012). Further
activities like 360
feedback and video
conference meeting with
loyal customers may also
provide information in
regard to their
expectations. Experts’
consultation is also
beneficial in order to
overcome the risk.
2. Cyber
Crimes
In current era,
the risk regarding
cyber crime is
increasing so it is
also one of the
critical risks for
Volkswagen
Group (Andersen
and Schrøder,
2010). It has
been noticed that
with a high
involvement of
technology, the
4 5 20 In order to overcome such
kind of issues, it is
significant for the
management of
Volkswagen Group to
effectively identify the
key factors which may
create cyber crime issue.
In addition to this, it can
be stated that the
management of
Volkswagen Group needs
to find the cyber crime
threats which are present
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risk is becoming
more popular so
management is
required to
consider it in an
appropriate
manner (Kalvet
and Lember,
2010). There are
number of illegal
hackers group in
the market who
can access
sensitive and
significant
information
about new
product
development.
Hackers may sell
sensitive
information in
the market that
may affect
overall
performance and
outcome in a
negative manner
(Samuels, 2014.).
It also indicates
that the
within environment (Hu,
and Hsu, 2010). It will
assist in analyzing the key
issues in an effective
manner so that strategies
can be designed in an
appropriate manner.
Company can have
strategic alliances with
number of cyber security
companies in order to
enhance the protection
aspects. Various
technological tools are
present in the market
which can be used to
protect information.
Frameworks can also be
applied within
organization to develop
awareness among
workforce about cyber
crime because it will assist
in overcoming issues in an
appropriate manner (Sun,
Matsui and Yin, 2012).
Moreover, the cyber
security system also needs
to be improved or
developed so that potential
threat in respect to cyber
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management of
Volkswagen
Group must
assure about it
and take
responsibilities to
accept such kind
of challenges.
Moreover, the
issue in regard to
cyber crime will
also impact the
reputation of
business firm
which may affect
trust factor when
it is concerned
with shareholders
(Strang, 2015).
These kinds of
aspects will also
have negative
impact on overall
organizational
performance.
crime can be overcome.
Moreover, to resolve the
risk of cyber crime the
ethical standards need to
be considered in an
appropriate manner. It is
also beneficial to tackle
potential crime effectively
(Olson, 2011). To have
effective mitigation of
cyber crime risk the
management of
Volkswagen Group need
to place the control
measures in its system. In
addition to this, it can be
said that the risk can be
controlled by focusing on
physical control, logical
control and finally
administrative control
(Song and Zhuang, 2016).
3.
Competition
Risk
As per the
detailed study, it
can be stated that
the automobile
industry is
becoming more
4 4 16 In order to have better
opportunities in the
market, it is significant for
management of
Volkswagen Group to
effectively evaluate key
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competitive in
the market which
may be critical
issue for the
organization. It is
necessary for
management to
focus on
competition
within industry
(Sweeting,
2011). With an
increased level of
competition, the
company is
facing various
barriers in the
market which
impact the
overall working
in a negative
manner. Market
share of
company can be
reduced which
might be critical
issue for the
business firm
(Wu, 2010).
Availability of
resources can
aspects that can provide
opportunity to gain
competitive advantage. It
is essential to understand
the competitive
environment and then
design strategies in an
appropriate manner to lead
business to impressive
level of success.
Management of
Volkswagen Group must
improve its operational
process to cut down the
cost (Tamasi, 2011).
Decrease in cost of
operation may provide
opportunities to increase
profit that is advantageous
to gain better competitive
advantage in the market.
Effectiveness at
operational level also
needs to be improved so
that overall performance
can be enhanced which
will help in gaining
competitive advantage.
Company can have
effective consideration of
key values that may
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also be
influenced in the
market because
of high ratio of
competition.
Substantial
amount of
resources
available to
companies also
require funding
so it is not easy
for businesses to
arrange proper
finance in
desired time
(Aebi, Sabato,
and Schmid,
2012). Number
of automobile
companies has
been established
in recent years
that has
increased ratio of
competition in
the market. Big
giants in the
industry are
using
competitive
enhance morale of
employees to take
responsibility. It will
assist in accepting
challenges and attaining
various benefits in
competitive market (Wu,
2010). Unique
performance system needs
to be developed so that
unique kind of products
and services can be
introduced in the market.
It will also attract more
customers towards
business which is
beneficial to gain better
competitive advantage. It
will also allow business to
provide better competition
in the market and
accomplish goals and
objectives in a desired
form. It is also significant
to evaluate the client
perception so that
products and services can
be designed in an
appropriate manner. It also
creates better
opportunities for the
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advantage in the
market so it is
necessary for
businesses to
analyze
competition
aspects
effectively.
(Chitakornkijsil,
2010). High ratio
of competition
may also
enhance the risk
factor due to
failure of
products in the
competitive
market. In such
aspect, the
opportunities to
takeover
businesses will
be decrease. It
means the
businesses need
to consider it in
appropriate
manner to meet
goals and
objectives
effectiveness
business entity and helps
in gaining competitive
advantage. Differentiation
in products and services is
also one of the critical
aspects that may enhance
opportunities for business
in highly competitive
market. Along with this,
better competition can be
provided to rivals to meet
goals and objectives.
(Bartak and Ghosh, et.al.,
2015).
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(Aebi, Sabato,
and Schmid,
2012).
4. Liquidity
risk
In addition to
this, it has been
identified that the
liquidity risk is
one of the critical
aspect that may
affect the
business. If
company is not
having better
opportunities in
the market then it
might be possible
that the
organization can
face issue
regarding
solvency. (Hu,
and Hsu, 2010).
If the
organization is
not having
effective
planning and
forecasting of
activities then
such type of
issue may be
4 3 12 In current market, the
business firm is facing
diverse issue in respect to
liquidity which may affect
overall outcome in a
desired way. In addition to
this, number of
frameworks need to be
designed by the
management by
considering financial
aspects (Andersen and
Schrøder, 2010). By
effectively designing the
strategies, business entity
may overcome issues in an
appropriate manner.
Through evaluating the
key financial ratios, the
liquidity aspects can be
understood in an
appropriate manner so that
goals and objectives can
be accomplished.
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occurred. It
impacts overall
working in a
negative manner
and create further
issues. Every
business demand
for advancement
in capital. (Sun,
Matsui and Yin,
2012). If
management of
Volkswagen
Group is not
having
appropriate
advancement in
capital then it
may affect
overall outcome.
In order to have
effective
development of
business entity,
the management
borrow financial
services from
national and
international
market. It is
necessary for the
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organization to
ensure that the
loan finance is
only used for
short term
period. If
business is not
having
appropriate
liquidity reserve
then management
may face critical
issue. Liquidity
ratio may give
rise to cash flow
fluctuation risk
that may also
affect overall
outcome of the
company.
5 Economic For instance, low
demand for
commercial
automobiles can
cause dropping
in profits. It
means if
management of
Volkswagen
Group is focused
towards investing
3 2 6
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high but the
economic
conditions within
nation are not
appropriate then
it will be
considered as
key risk. It
indicates that in
such type of
situation the risk
factor influence
can be
considered as
very high. In
respect to the
current condition
of market the
demand of cars
in market is high
so it is one of the
key opportunities
for organisation.
It also leads
business to
impressive level
of success and
ensures that
company is
having better
opportunities in
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the market (Aebi,
Sabato, and
Schmid, 2012).
In addition to
this, it can also
be stated that the
current economic
condition of its
parent nation are
stable so the risk
in this context is
low. Nation is
not having any
type of issue in
respect to
recession so
management is
having
sustainable
growth in the
market
(Andersen and
Schrøder, 2010).
In addition to
this, the tax
incentives are
also taken by the
government
which has further
improved the
stability aspects.
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It also allows
better
opportunities.
However, the
external affairs
have decreased
effectiveness of
current economic
system. It affects
the economic
growth of the
country which
may also
influence the
growth of
Volkswagen
Group. Auto
mobile company
is focused
towards number
of new projects
that may enhance
the opportunity
for
organisation(Hu,
and Hsu, 2010).
(Kalvet and
Lember, 2010).
However, the
economic risk for
business is also
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dependent on the
availability of
raw materials,
parts, suppliers
performance and
subcontractors
(Olson, 2011)
6.
Environme
ntal risk
As per detailed
study, it can be
stated that the
environmental
aspects also
affects the
business firm
growth because
environment is
considered as
one of the critical
aspect in current
conditions.
(Samuels, 2014.).
Nowadays,
people are
demanding low
carbon auto
mobiles so it is
essential for
management of
Volkswagen
Group to ensure
about it in an
1 4 4
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appropriate
manner. (Song
and Zhuang,
2016). If
management is
not focused
towards ethical
consideration of
environmental
aspects then it
may affect the
overall
development.
7.
Leadership
change
Volkswagen
Group is looking
forward to have
implementation
of change
management so
that overall
performance can
be improved
(Strang, 2015).
The employee's
prefer towards
participative
leadership and
company is also
concerned
towards it.
However, the
1 4 4
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management is
also not looking
forward to bring
any kind of
uncertainty
which reduces
the risk about
leadership
change.
OPPORTUNITIES
Opportunity Likelihood Impact Risk Score
Entering in new
market
In the current
market
conditions, the
business firm is
having better
opportunities to
expand activities
in the market. It
has been noticed
that the use of
cars has been
increased in
recent years
which leads
businesses to
impressive level
of success. It
means that the
company can
4 -4 -16
20

expand its
business in
diverse nations so
that goals and
objectives can be
accomplished in
an appropriate
manner. It will
also assist
business firm to
have better
competitive
advantage in the
market.
Cyber security
expansion
It has been
noticed that the
cyber crime is
one of the critical
issue for the
business but the
firm can
effectively
develop new
system that can
assure about
cyber crime. New
tools can be used
by the
management to
have sustainable
development and
3 4 -12
21

accomplish goals
and objectives
effectively
manner. It will
provide good
position in the
market which will
help in increasing
profitability of the
organization
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REFERENCES
Books and Journals
Aebi, V., Sabato, G. and Schmid, M., 2012. Risk management, corporate governance, and bank
performance in the financial crisis. Journal of Banking & Finance. 36(12). pp. 3213-3226.
Andersen, T. J. and Schrøder, P. W., 2010. Strategic risk management practice: how to deal
effectively with major corporate exposures. Cambridge University Press.
Bartak, R. and Ghosh, et.al., 2015. Application of risk-based assessment and management to
riverbank filtration sites in India. Journal of water and health. 13(1). pp. 174-189.
Chitakornkijsil, P., 2010. Enterprise risk management. International Journal of Organizational
Innovation. 3(2) pp.309.
Hu, A. H. and Hsu, C. W., 2010. Critical factors for implementing green supply chain
management practice: an empirical study of electrical and electronics industries in Taiwan.
Management research review. 33(6). pp.586-608.
Kalvet, T. and Lember, V., 2010. Risk management in public procurement for innovation: the
case of Nordic–Baltic Sea cities. Innovation–the European journal of social science
research. 23(3). pp.241-262.
Olson, D.L., 2011. Supply chain risk management: tools for analysis. Business Expert Press.
Samuels, B.C., 2014. Managing Risk in Developing Countries: National Demands and
Multinational Response. Princeton University Press.
Song, C. and Zhuang, J., 2016. Regulating food risk management—a government–manufacturer
game facing endogenous consumer demand. International Transactions in Operational
Research.
Strang, K. D., 2015. Risk Management Research Design Ideologies, Strategies, Methods, and
Techniques. Research Methods: Concepts, Methodologies, Tools, and Applications:
Concepts. Methodologies, Tools, and Applications. pp. 362.
Sun, J., Matsui, M. and Yin, Y., 2012. Supplier risk management: An economic model of P-chart
considered due-date and quality risks. International Journal of Production Economics.
139(1). pp.58-64.
Sweeting, P., 2011. Financial Enterprise Risk Management. Cambridge University Press.
Tamasi, G., 2011. Risk assessment techniques for civil aviation security. Reliability Engineering
& System Safety. 96(8). pp.892-899.
Wu, D., 2010. Enterprise risk management: coping with model risk in a large bank. Journal of
the Operational Research Society. 61(2). pp.179-190.
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Online
Reputation. The Hardest Risk to Manager, 2013. [Online]. Available through:
<http://www.acegroup.com/global-assets/documents/Europe-Corporate/Thought-
Leadership/ace_reputation_at_risk_july_2013.pdf>. [Accessed on 18th July 2016].
Ergonomics in the Workplace, 2011. [Online]. Available through: <http://www.impact.ie/wp-
content/uploads/2015/07/HSA-Ergonomics-2006.pdf>. [Accessed on 18th July 2016].
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