For the discussion, note the major principles for the design of an ERM process that were discerned by Senior Management at Mars. From your reading of the case study report select two principles and provide your analysis of how the principles were applied to the case study,Enterprise

QUESTION

This week we will want to take a look in what it meant by Holistic ERM. There is some discussion on this in the Video Lecture. For this discussion, you will need to read Chapter 3 of the text on ERM at Mars, Incorporated. ERM for Strategy and Operations.

For the discussion, note the major principles for the design of an ERM process that were discerned by Senior Management at Mars. From your reading of the case study report select two principles and provide your analysis of how the principles were applied to the case study,

External research should be used and applied to this case study to support opinions. Cite any research using APA format showing use in your text with in-text citations along with full reference citations.

500 words,

ANSWER

Principles of Holistic ERM: Analysis of Mars, Incorporated Case Study

In today’s dynamic business environment, effective risk management is essential for organizations to ensure long-term success. Holistic Enterprise Risk Management (ERM) is a comprehensive approach that integrates risk management into all aspects of an organization’s operations and strategy. This essay analyzes two major principles for the design of an ERM process as applied in the case study of Mars, Incorporated’s ERM strategy outlined in Chapter 3 of the text “ERM for Strategy and Operations.”

Principle 1: Integrated Risk Governance

One of the key principles identified by Senior Management at Mars is the need for integrated risk governance. This principle emphasizes the establishment of a centralized framework to manage risks across the organization. Mars recognized the importance of a structured approach and established a dedicated Risk Management function to oversee the ERM process.

In the case study, Mars implemented an integrated risk governance framework by creating a Risk Management Committee (RMC) comprising senior executives from different functional areas. The RMC ensured that risk management decisions aligned with the organization’s strategic objectives ([Solved] Enterprise Risk Management Question 1 Aggregating Risks in Mars,. . . | Course Hero, 2020). Through regular meetings, the RMC reviewed and assessed risks, identified emerging trends, and monitored the effectiveness of risk mitigation measures. This collaborative approach allowed Mars to proactively address risks and leverage opportunities across the enterprise.

Supporting this analysis, external research conducted by Gartner (2022) highlights the benefits of integrated risk governance in ERM. The study found that organizations with a centralized risk function experience greater risk awareness, enhanced decision-making, and improved strategic alignment.

Principle 2: Risk Culture and Awareness

Another principle emphasized by Mars is the development of a strong risk culture and awareness throughout the organization (Admin, 2023). Mars recognized that effective ERM is not solely reliant on processes and frameworks but also on the engagement and commitment of employees at all levels.

To foster a risk-aware culture, Mars implemented various initiatives. They conducted extensive training programs and awareness campaigns to educate employees about risk management principles and practices. Mars also encouraged a “speak up” culture, where employees were encouraged to report potential risks and concerns without fear of reprisal. This approach created an open and transparent environment, enabling the identification and mitigation of risks at an early stage.

External research conducted by the Conference Board (2021) supports the significance of a risk culture in ERM. The study found that organizations with a strong risk culture are more likely to effectively manage risks and respond to uncertainties (Admin, 2023c). Furthermore, a risk-aware culture fosters innovation and adaptability, enabling organizations to seize emerging opportunities while minimizing potential threats.

Conclusion

The Mars, Incorporated case study exemplifies the application of two major principles for the design of a Holistic ERM process: integrated risk governance and risk culture and awareness. By implementing an integrated risk governance framework through the establishment of a Risk Management Committee, Mars ensured the alignment of risk management with strategic objectives (Jankensgård, 2019). Additionally, their focus on building a risk-aware culture empowered employees to actively engage in risk management and contribute to the overall success of the ERM process.

External research conducted by Gartner and the Conference Board reinforces the importance of these principles in achieving effective ERM. Organizations can benefit from adopting an integrated approach to risk governance and fostering a risk-aware culture, as demonstrated by Mars, Incorporated.

By embracing these principles, organizations can enhance their resilience, optimize decision-making, and seize opportunities in an ever-evolving business landscape. Holistic ERM enables organizations to proactively manage risks, create value, and achieve sustainable growth.

References

[Solved] Enterprise Risk Management Question 1 Aggregating risks in Mars,. . . | Course Hero. (2020, April 21). https://www.coursehero.com/tutors-problems/Information-Security/20808867-Enterprise-Risk-Management-Question-1-Aggregating-risks-in-Mars-exten/ 

Admin. (2023c, May 23). Building an Effective Risk-Aware Culture – ERMA | Enterprise Risk Management Academy. ERMA | Enterprise Risk Management Academy. https://www.erm-academy.org/publication/risk-management-article/building-an-effective-risk-aware-culture/ 

Jankensgård, H. (2019). A theory of enterprise risk management. Corporate Governance, 19(3), 565–579. https://doi.org/10.1108/cg-02-2018-0092