Developing an Enterprise Risk Management Program

3. Our clients represent leading companies in a wide range of industries

4. As discussed in James� recent book, we define ERM as a value added function

5. Key trends and requirements Best practices and practical applications ERM in the future Discussion outline

6. ERM is useful because the risks faced by companies are highly interdependent

7. Traditionally, risks were managed within organizational �silos�

8. ERM provides an integrated value-added approach

9. Early adopters of ERM have reported significant and tangible benefits

10. The growing acceptance of ERM is driven by four key forces

13. There is an important distinction between internal controls and ERM

14. The enterprise risk management process

15. An ERM system should address all risk types, qualitative and quantitative data, and risk monitoring and management applications

16. An �executive dashboard� based technology approach

17. An ERM dashboard should provide the CRO and senior management with full risk transparency Compliance with risk policies and regulations Exposures vs. policy limits Regulatory compliance Earnings-at-risk Major internal drivers Key external variables Risk/return performance tracking Business units Customer segments Products �Right time� risk reporting One touch visibility Drill down capabilities 24x7 escalation Early warning signals

18. Case study:

19. Engaged senior management and board of directors Established policies, systems, and processes, supported by a strong risk culture Clearly defined risk appetite with respect to risk limits and business boundaries Robust risk analytics for intra- and inter-risk measurement, summarized in an �ERM dashboard� Risk-return management via integration of ERM into strategic planning, business processes, performance measurement, and incentive compensation Hallmarks of success in ERM

20. Key trends and requirements Best practices and practical applications ERM in the future Discussion outline

21. ERM will become the industry standard CROs prevalent in risk-intensive companies Audit committees will evolve into risk committees Economic capital in; VaR out Risk transfer executed at enterprise level Advanced technologies key to advancement A measurement standard will emerge for operational risk Risk-based or economic reporting becomes standard Risk becomes part of corporate and college programs Salary gap among risk professionals continues to widen Ten predictions on the future of enterprise risk management

22. James Lam�s contact information Phone: 781-772-1961 Email: jameslam@comcast.net Thank you