Enterprise Risk Management Research

The assignment delves into a comprehensive review of enterprise risk management (ERM). It examines various perspectives on ERM, including definitions, methodologies, benefits, challenges, and future research directions. The provided literature sources cover a range of topics within ERM, such as internal audit involvement, the value of ERM, and the integration of ERM with financial management.

ENTERPRISE
RISK MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
a) Aims and objectives of DuPont .............................................................................................1
b) Problems encountered by the organisation in past..................................................................2
c) Problems faced by other organizations in the same sector encountered in the past...............3
d) Regulations applicable to the organisation and sector............................................................4
e) Potential opportunities that enhance the company performance............................................5
f) Identifying, assessing and scoring each risk of threats and opportunities ..............................5
g) Defining the acceptable risk threshold..................................................................................11
h) Identifying mitigation actions for risk which are stated ......................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Enterprise risk management can be defined as a process which involve different methods
and processes used by venture in order to manage their risks and seize different opportunities for
achieving their different aims and objectives. Further, it also provides framework for risk
management which involves identification of events which are relevant to organization
objectives, assessing them in terms of their likelihood, determining response strategy for same
and monitoring process effectively (Lam, 2014). The organization undertaken for the present
study is DuPont which is world's fourth largest chemical company based on market
capitalization. Cited firm mainly deal in gun powder along with different other products like
Corian, Kapton, Mylar, Nylon, etc.
Further, this present document will discuss various difficulties which organization have
encountered in past and also the problems which venture is facing in current time period. This
present report will also showcase opportunities and threats which organization is facing and
different mitigation taken in order to solve them.
a) Aims and objectives of DuPont
DuPont is America's conglomerate company which was established in 1802 for
producing gunpowder (McNeil, 2013). Cited firm is considered in top 5 chemical companies and
is at eighth position in terms of revenue. DuPont in the 19th century has become the largest
supplier of gunpowder to United States Military, Union Army and American Civil War. Aims
and objectives of cited enterprise has been discussed down under: Vision- Organization vision is to lead with examples within the sector in which they are
operating. Cited firm also focusing in contributing to economic growth through
practicing best of the business activities so that do not influence the environment. Cited
firm vision is to improve their operational footprint and give their best of the efforts in
order to enhance the global food security. Apart from it, food Security is also in the heart
of company's priorities. Lastly, with continuous focus on improving carbon footprint,
organization has set new goals and objectives in emissions, water use and also for waste
products.
 Mission: DuPont mission is to satisfy their customer’s needs in better way so that they
produce the best quality of products/services so that they become potential and loyal
customers of firm (Hoyt and Liebenberg, 2011). Moreover, cited firm develops
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exceptional values for their clients as well as for investors so that they contribute more of
the wealth in expansion of firm. Apart from it, employees are the base of their success
and mentioned organization focuses on implementing best of the practice in order retain
them and give maximum satisfaction. Further, mentioned company is also giving their
best in different CSR activities like helping farmers, promoting food security and
different other health and other activities (Wu and Olson, 2015). Further, their mission is
to get ahead of their major competitors who are working within the same industry.
b) Problems encountered by the organisation in past
Despite being the fourth largest chemical company in the world, Dupont faces many
changes in different aspects such as competition policy, environmental issues, occupational
health and safety, labour matters and human rights and discrimination issues.
Competition policy: With respect to the sale of various explosives and related products company
has many challenges and problems due of charges of antitrust violations made. Further, it was
targeted with the charges of making illegal connections with controlling interests in organisations
such as general motors.
Climate issues: There are many issues faced by the company in the environmental context.
Extreme fatality of some product produced by DuPont such as gunpowder has increased the
frequency of explosions many times in the past (Chapman, 2011). In that respect, conveyance
was ban at some towns. Further, the production of products such as freon was curtailed due to
their significant harmful impact on atmosphere as it contributes in ozone depletion.
Health and safety at work place: The given organisation has faced slew of problems in regard to
occupational health and safety. Fir instance, the death of few workers occurred at the time of
production of tetra-ethyl lead. Further, the manufacturing of certain products has endangered the
heath of workers causing them life threatening diseases.
Employees issues: Labour issues have been the major concern for the organisation as it was
many times driven by anti union forces and labour movements (Driver and Bernard, 2012).
Many unions join hands to strike against the working of the organisation.
Human rights and discrimination issues: The company Du Pont has faced the strong opposition
from the activist working for the safety of human rights and against the discrimination on any
grounds.
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c) Problems faced by other organizations in the same sector encountered in the past
In the year 2015, DuPont and its similar industries are facing serious environmental
hazards such as depletion of ozone layer and serious pollution problems. Following are the
biggest problems that are being encountered by the similar sector are as follows-
 Environment- It can be assessed that company faces various issues regarding
environmental pollution and thus deplete the ozone layer. DuPont and its several
competitors such as BASF SE, EXXON MOBIL CORPORATION, The Dow Chemical
Company etc (McShane, Nair and Rustambekov, 2011). working within chemical sector
is required to follow different environmental laws and regulations so that they can
overcome the environmental issues. However, organizations involved in manufacturing
chemical products contributes to the destruction of earth's ozone layer and also increases
the chance of skin cancer from the sun rays.
 Occupational health and safety- Organizations faced issues regarding workplace health
and safety because of death of workers due to poisoning of several gases. Apart from
this, it also affects high level of bladder cancer among production workers and thus it
results into the death (Paape and Speklè, 2012). Therefore, it is essential for chemical
companies to protect the health and safety of workers at workplace by implying effective
rules and regulations such as Health and Safety Act.
 Labor- Here, it identifies that labor is one of the major problems beings faced by
chemical sector because it requires skilled workers in order to efficiently work in
chemical factories. Also, organizations such as DuPont and its competitors needs to
introduce different fringe benefits such as pension plans so that workers can be
encouraged to work in the mines. Further, if incentive plans are not introduced on timely
manner than it affects the productivity and team working within firm. Therefore, DuPont
need to form effective employee engagement technique in order to identify the needs of
employees and provide them so that satisfaction can be attained (Arena, Arnaboldi and
Azzone, 2011).

d) Regulations applicable to the organisation and sector
Working in the chemical industry and having its operations around the globe, Du Pont
has abided the regulations and laws of different regions and function its operations accordingly.
Engaged in slew of activities such as manufacturing, processing, marketing, research and
development and distribution the major places of its functioning are United States, China, and
India. All the countries has different regulations and laws that are supposed by comply by it.
Along with this there are some global conventions with respect to the regulation of use of
chemicals (Baxter and et.al, 2013).
International conventions Stockholm Convention to protect the health of human from hazardous impact of
chemicals manufactured and released by the industries. Basel convention to regulate the distribution of chemicals and hazardous elements on
global level between countries. Montreal protocol to control the ozone depleting chemicals such as produced by Du
Pont. Globally Harmonised system of classification and labelling of chemicals enables the Du
Pont to protect the human health while production and distribution of chemicals through
effective handling and proper transportation.
Regional conventions United states: Du Pont abide the Toxic substance control Act and Environmental law in
United states in this regard and comply with manufacturing as per the law. China: Environmental protection law of people's republic of china, Law on marine
environment protection 1983 and Law on clean promoting clean production 2002
enforces the organisation Du Pont to protect the lives and health of people and resources
with legal operational measures (Gates, Nicolas and Walker, 2012).
 India : In India Du Pont is accountable to follow the two fundamental laws while its
operations in India that are Environment protection act 1986 and Hazardous waste
handling and management act 1989. As per these laws company is liable to follow the
operations which is in accordance with the framework decided to prevent the resources
from loss occurred by hazardous chemicals produced and distributed by Du Pont
company (McNeil, Frey and Embrechts, 2015).
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e) Potential opportunities that enhance the company performance
Following are the different opportunities being involved within DuPont in order to
improve the business performance-
 Innovative technology- DuPont is focused primarily on finding innovative solutions in
regard to protect the people, property and environment operations (Bromiley and et.al.,
2015). Thus, it helps DuPont to improve the safety technology and thus helps in
producing innovative product such as food for consumers so that they can overcome
illness of people.
 Removal of international trade barriers- Through removing the international trade
barriers, DuPont can operate its functioning within other countries with no or few
restrictions from regulatory bodies. Therefore, the investors and shareholders will gain
high return and thus build good brand image in market.
 Security and authentication- Here, it assesses that DuPont needs to protect and
safeguard its employees from any chemical hazard. Thus, providing such type of security
measures helps in making strong connection with workers and enhance the productivity
of firm.
 Merger and acquisition- DuPont also possess option to carry out merger and acquisition
with other chemical industries so that performance of firm can be enhanced. It also assists
company to merge with another competitors and produce better results which improves
the performance of firm (Huang and et.al., 2011).
f) Identifying, assessing and scoring each risk of threats and opportunities
Threats for DuPont
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Risk
No. Risk
Description
Risk Information sources
(i.e. references from
research)
Likelih
ood (1-
5)
Impact
(1-5)
Risk Rating
(Likelihood
x Impact)
Score
above
acceptable
level
1.
Quality of
products
and services
In order to overcome the
marketing sensitivity,
DuPont has to set specific
target in order to achieve
their stated mission and
vision. Apart from it, cited
venture need to follow all
the prior regulations which
will certainly help them in
proper functioning of
business enterprise.
3 4 12 Yes
2.
Competitors
Cited firm has various
competitors who working in
the same field and
influencing profitability of
DuPont. Some of them are
Air Products and
Chemicals, Inc., Axiall
Corporation, Chemours
Company, etc.
4 4 16 Yes
3. Need of
talented
employees
Cited firm has their
operations throughout the
globe and organization is
always in need of talented
employees in order to
improve their efficiency
and capabilities (Rejda,
3 4 12 Yes
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2011). Moreover, workers
are not that much skilled
and multi talented as well.
Further, recruitment
procedure of cited firm is
also not good as DuPont do
not have effective
recruitment policy and the
candidates who are selected
are always in need of
training and development in
order to comply their task
efficiently and effectively.
Opportunities for DuPont
Risk
No. Risk
Description
Risk Information sources
(i.e. references from
research)
Likelih
ood (1-
5)
Impact
(1-5)
Risk Rating
(Likelihood
x Impact)
Score
above
acceptable
level
7

1
Innovative
technology
DuPont is focused primarily
on finding innovative
solutions in regard to
protect the people, property
and environment
operations. Thus, it helps
DuPont to improve the
safety technology and thus
helps in producing
innovative product such as
food for consumers so that
they can overcome illness
of people (Tang and Musa,
2011). Also, through using
best technology firm assists
workers to provide better
working conditions.
Furthermore, introducing
innovative technology will
possess a long term positive
impact upon DuPont and
thus it helps in minimizing
the cost and thus increases
the productivity of firm.
2 2 4 NO
8

2
Removal of
international
trade
barriers
Through removing the
international trade barriers,
DuPont can operate its
functioning within other
countries with no or few
restrictions from regulatory
bodies (de Zwaan, Stewart
and Subramaniam, 2011).
Therefore, the investors and
shareholders will gain high
return and thus build good
brand image in market.
1 3 3 NO
3
Security and
authenticati
on
Here, it assesses that
DuPont needs to protect
and safeguard its employees
from any chemical hazard.
Thus, providing such type
of security measures helps
in making strong
connection with workers
and enhance the
productivity of firm (Driver
and Bernard, 2012).
Further, cited firm also has
security of data for their
employees as well as of
their customers.
2 3 6 NO
9

4.
Merger and
acquisition
DuPont also possess option
to carry out merger and
acquisition with other
chemical industries so that
performance of firm can be
enhanced. It also assists
company to merge with
another competitors and
produce better results which
improves the performance
of firm.
2 2 4 NO
g) Defining the acceptable risk threshold
Likelihood Score Impact Score
1 Very unlikely 1 Negligible Impact
2 Unlikely 2 Low Impact
3 Likely 3 Moderate Impact
4 Very Likely 4 High Impact
5 Certain 5 Catastrophic Impact
Score of risk Classification Mitigation
x<1 Opportunity No Being insignificant in nature, the
risks scoring below 15 are not kept
in consideration for preparing the
mitigation plan. Their less
catastrophic and existence make it
uncontrollable for which plan can
not be prepared. In that respect it is
not essential to include in the risk
1<= x <5 Negligible risk No
5<=x <10 Low risk No
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management planning
10<=x <15 Moderate risk Yes With the value more than 10, risk
scoring have the considerable
amount of consequences on
organisation. It is imperative to
mitigate its influence to prevent the
hampering of organisational
performances.
15 <= x <=20 High risk Yes
h) Identifying mitigation actions for risk which are stated
R
is
k
N
o.
Risk
Description
Likeli
hood
(1-5)
Impact
(1-5)
Risk
Rating
(Likelih
ood x
Impact)
Score
above
accept
able
level
Mitigation
1.
Quality of
products and
services
3 4 12 Yes
DuPont plans to deliver high
quality products or services in
order to overcome the identified
risks. With the help of
delivering effective product
quality it improves the business
performance and thus attain
desired targets in the form of
high sales and revenue. Through
providing best quality products,
it helps firm to minimize the
interference of competitors so
that set goals can be attained.
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2.
Competitors 4 4 16 Yes
Here, it is essential for DuPont
to overcome the competitors
through merging or acquiring
them and thus produce effective
products or services. Also, it is
significant for DuPont to
produce effective products or
services in order to overcome
competition and thus improve
the performance of firm in
market. However, through
delivering latest technology
products, company can enhance
its market share and thus
provide best quality chemical
products and fulfil the needs of
its customers.
3.
Need of
talented
employees 3 4 12 Yes
Through employing skilled
candidates in the workplace it
helps DuPont to improve its
efficienty and enhances the
performance of company to
attain desired output.
CONCLUSION
Business organisations in order to utilize the resources in an optimum manner, manage
there risk in the effective manner. In that respect Enterprise risk management is the structured
and systematic approach to identify and control the risk encountered by the organisation. The
present scenario given about the Du Pont which is the world's leading chemical company faces
number of risks on different degrees. From the study it can be articulated that it follows the set of
activities in the formatted way to control risks. On the basis of different risk level, measures are
adopted to control their effects on organisation's capital and earnings.
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REFERENCES
Books and Journals
Arena, M., Arnaboldi, M. and Azzone, G., 2011. Is enterprise risk management real?. Journal of
risk research. 14(7). pp.779-797.
Baxter, R. and et.al., 2013. Enterprise risk management program quality: Determinants, value
relevance, and the financial crisis. Contemporary Accounting Research. 30(4). pp.1264-
1295.
Bromiley, P. and et.al., 2015. Enterprise risk management: Review, critique, and research
directions. Long range planning. 48(4). pp.265-276.
Chapman, R.J., 2011. Simple tools and techniques for enterprise risk management. John Wiley
& Sons.
de Zwaan, L., Stewart, J. and Subramaniam, N., 2011. Internal audit involvement in enterprise
risk management. Managerial auditing journal. 26(7). pp.586-604.
Driver, J. and Bernard, R., 2012. Enterprise risk management. In The SAGES manual of quality,
outcomes and patient safety. Springer US.
Gates, S., Nicolas, J.L. and Walker, P.L., 2012. Enterprise risk management: A process for
enhanced management and improved performance. Management accounting quarterly.
13(3). pp.28-38.
Hoyt, R.E. and Liebenberg, A.P., 2011. The value of enterprise risk management. Journal of risk
and insurance. 78(4). pp.795-822.
Huang, S.M. And et.al., 2011. Building the evaluation model of the IT general control for CPAs
under enterprise risk management. Decision Support Systems. 50(4). pp.692-701.
Lam, J., 2014. Enterprise risk management: from incentives to controls. John Wiley & Sons.
McNeil, A.J., 2013. Enterprise Risk Management. Annals of Actuarial Science. 7(01). pp.1-2.
McNeil, A.J., Frey, R. and Embrechts, P., 2015. Quantitative risk management: Concepts,
techniques and tools. Princeton university press.
McShane, M.K., Nair, A. and Rustambekov, E., 2011. Does enterprise risk management increase
firm value?. Journal of Accounting, Auditing & Finance. 26(4). pp.641-658.
Paape, L. and Speklè, R.F., 2012. The adoption and design of enterprise risk management
practices: An empirical study. European Accounting Review. 21(3). pp.533-564.
Rejda, G.E., 2011. Principles of risk management and insurance. Pearson Education India.
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Tang, O. and Musa, S.N., 2011. Identifying risk issues and research advancements in supply
chain risk management. International Journal of Production Economics. 133(1). pp.25-34.
Wu, D.D. and Olson, D.L., 2015. Enterprise Risk Management. In Enterprise Risk Management
in Finance. Palgrave Macmillan UK.
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