Simple Tools and Techniques for Enterprise Risk Management -- List of Figures -- Preface to the Second Edition -- Acknowledgements -- About the Author -- PART I ENTERPRISE RISK MANAGEMENT IN CONTEXT -- 1 Introduction -- 1.1 Risk Diversity -- 1.2 Approach to Risk Management -- 1.3 Business Growth Through Risk Taking -- 1.4 Risk and Opportunity -- 1.5 The Role of the Board -- 1.6 Primary Business Objective (or Goal) -- 1.7 What is Enterprise Risk Management? -- 1.8 Benefits of Enterprise Risk Management -- 1.9 Structure -- 1.9.1 Corporate Governance -- 1.9.2 Internal Control -- 1.9.3 Implementation -- 1.9.4 Risk Management Framework -- 1.9.5 Risk Management Policy -- 1.9.6 Risk Management Process -- 1.9.7 Sources of Risk -- 1.10 Summary -- 1.11 References -- 2 Developments in Corporate Governance in the UK -- 2.1 Investor Unrest -- 2.2 The Problem of Agency -- 2.3 The Cadbury Committee -- 2.4 The Greenbury Report -- 2.5 The Hampel Committee and the Combined Code of 1998 -- 2.6 Smith Guidance on Audit Committees -- 2.7 Higgs -- 2.8 Tyson -- 2.9 Combined Code on Corporate Governance 2003 -- 2.10 Companies Act 2006 -- 2.11 Combined Code on Corporate Governance 2008 -- 2.12 Sir David Walker's Review of Corporate Governance, July 2009 (Consultation Paper) -- 2.13 Sir David Walker's Review of Corporate Governance, November 2009 (Final Recommendation) -- 2.14 House of Commons Treasury Committee 2009 -- 2.15 UK Corporate Governance Code, June 2010 -- 2.16 The "Comply or Explain" Regime -- 2.17 Definition of Corporate Governance -- 2.18 Formation of Companies -- 2.19 The Financial Services Authority and Markets Act 2000 -- 2.20 The London Stock Exchange -- 2.21 Summary -- 2.22 References -- 3 Developments in Corporate Governance in the US -- 3.1 Corporate Governance -- 3.2 The Securities and Exchange Commission -- 3.2.1 Creation of the SEC.

3.2.2 Organisation of the SEC -- 3.3 The Laws That Govern the Securities Industry -- 3.3.1 Securities Act 1933 -- 3.3.2 Securities Exchange Act 1934 -- 3.3.3 Trust Indenture Act 1939 -- 3.3.4 Investment Company Act 1940 -- 3.3.5 Investment Advisers Act 1940 -- 3.4 Catalysts for the Sarbanes-Oxley Act 2002 -- 3.4.1 Enron -- 3.4.2 WorldCom -- 3.4.3 Tyco International -- 3.4.4 Provisions of the Act -- 3.4.5 Implementation -- 3.4.6 Sarbanes-Oxley Section 404 -- 3.4.7 The Positive Effects of Post-Enron Reforms -- 3.4.8 Criticism of Section 404 Before the Global Financial Crisis -- 3.4.9 Criticism of Section 404 After the Global Financial Crisis -- 3.5 National Association of Corporate Directors 2008 -- 3.6 Summary -- 3.7 References -- 4 The Global Financial Crisis of 2007-2009: A US Perspective -- 4.1 The Financial Crisis in Summary -- 4.2 How the Financial Crisis Unfolded -- 4.3 The United States Mortgage Finance Industry -- 4.4 Subprime Model of Mortgage Lending -- 4.4.1 Contributing Events to the Credit Crisis -- 4.4.2 Foreclosures -- 4.4.3 Negative Equity -- 4.4.4 Housing Surplus -- 4.4.5 Vicious Circles -- 4.5 Why this Crisis Warrants Close Scrutiny -- 4.6 Behaviours -- 4.6.1 Investor Behaviour in the Search for Yield -- 4.6.2 Mortgage Lending Behaviour -- 4.6.3 Bank Behaviour and Risk Transfer through Securitised Credit -- 4.6.4 "Group Think" and Herd Behaviour -- 4.6.5 Banks' Behaviour and Risk Appetite -- 4.6.6 Behaviour of Regulators and the Division of "Narrow Banking" from Investment Banking -- 4.6.7 Banks' Behaviour and Misplaced Reliance of Sophisticated Mathematics and Statistics -- 4.7 Worldwide Deficiencies in Risk Management -- 4.8 Federal Reform -- 4.9 Systemic Risk -- 4.10 The Future of Risk Management -- 4.11 Summary -- 4.12 References -- 5 Developments in Corporate Governance in Australia and Canada.

5.1 Australian Corporate Governance -- 5.1.1 Regulation Arising from Corporate Failures -- 5.1.2 Corporate Governance Reforms Following the Accounting Scandals of the Early 2000s -- 5.1.3 Horwath 2002 Corporate Governance Report -- 5.1.4 The ASX Corporate Governance Council -- 5.1.5 Financial Statements -- 5.2 Canada -- 5.2.1 Dey Report -- 5.2.2 Dey Revisited -- 5.2.3 Kirby Report -- 5.2.4 Saucier Committee -- 5.2.5 National Policy and Instrument (April 2005) -- 5.2.6 TSE Corporate Governance: Guide to Good Disclosure 2006 -- 5.3 Summary -- 5.4 References -- 6 Internal Control and Risk Management -- 6.1 The Composition of Internal Control -- 6.2 Risk as a Subset of Internal Control -- 6.2.1 The Application of Risk Management -- 6.3 Allocation of Responsibility -- 6.3.1 Cadbury Committee -- 6.3.2 Hampel Committee -- 6.3.3 Turnbull -- 6.3.4 Higgs Review -- 6.3.5 Smith Review -- 6.3.6 OECD -- 6.4 The Context of Internal Control and Risk Management -- 6.5 Internal Control and Risk Management -- 6.6 Embedding Internal Control and Risk Management -- 6.7 Summary -- 6.8 References -- 7 Developments in Risk Management in the UK Public Sector -- 7.1 Responsibility for Risk Management in Government -- 7.1.1 Cabinet Office -- 7.1.2 Treasury -- 7.1.3 Office of Government Commerce -- 7.1.4 National Audit Office -- 7.2 Risk Management Publications -- 7.3 Successful IT -- 7.4 Supporting Innovation -- 7.4.1 Part 1: Why Risk Management is Important -- 7.4.2 Part 2: Comprehension of Risk Management -- 7.4.3 Part 3: What More Needs to be Done to Improve Risk Management -- 7.5 The Orange Book -- 7.5.1 Identify the Risks and Define a Framework -- 7.5.2 Assign Ownership -- 7.5.3 Evaluate -- 7.5.4 Assess Risk Appetite -- 7.5.5 Response to Risk -- 7.5.6 Gain Assurance -- 7.5.7 Embed and Review -- 7.6 Audit Commission -- 7.7 CIPFA/SOLACE Corporate Governance -- 7.8 M_o_R 2002.

7.9 DEFRA -- 7.9.1 Risk Management Strategy -- 7.10 Strategy Unit Report -- 7.11 Risk and Value Management -- 7.12 The Green Book -- 7.12.1 Optimism Bias -- 7.12.2 Annex 4 -- 7.13 CIPFA Guidance on Internal Control -- 7.14 Managing Risks to Improve Public Services -- 7.15 The Orange Book (Revised) -- 7.16 M_o_R 2007 -- 7.17 Managing Risks in Government -- 7.18 Summary -- 7.19 References -- PART II THE RISK MANAGEMENT PROCESS -- References -- 8 Establishing the Context: Stage 1 -- 8.1 Process -- 8.2 Process Goal and Subgoals -- 8.3 Process Definition -- 8.4 Process Inputs -- 8.5 Process Outputs -- 8.6 Process Controls (Constraints) -- 8.7 Process Mechanisms (Enablers) -- 8.7.1 Ratios -- 8.7.2 Risk Management Process Diagnostic -- 8.7.3 SWOT Analysis -- 8.7.4 PEST Analysis -- 8.8 Process Activities -- 8.8.1 Business Objectives -- 8.8.2 Business Plan -- 8.8.3 Examining the Industry -- 8.8.4 Establishing the Processes -- 8.8.5 Projected Financial Statements -- 8.8.6 Resources -- 8.8.7 Change Management -- 8.8.8 Marketing Plan -- 8.8.9 Compliance Systems -- 8.9 Summary -- 8.10 References -- 9 Risk Identification: Stage 2 -- 9.1 Process -- 9.2 Process Goal and Subgoals -- 9.3 Process Definition -- 9.4 Process Inputs -- 9.5 Process Outputs -- 9.6 Process Controls (Constraints) -- 9.7 Process Mechanisms (Enablers) -- 9.7.1 Risk Checklist -- 9.7.2 Risk Prompt List -- 9.7.3 Gap Analysis -- 9.7.4 Risk Taxonomy -- 9.7.5 PEST Prompt -- 9.7.6 SWOT Prompt -- 9.7.7 Database -- 9.7.8 Business Risk Breakdown Structure -- 9.7.9 Risk Questionnaire -- 9.7.10 Risk Register Content/Structure -- 9.8 Process Activities -- 9.8.1 Clarifying the Business Objectives -- 9.8.2 Reviewing the Business Analysis -- 9.8.3 Need for Risk and Opportunity Identification -- 9.8.4 Risk and Opportunity Identification -- 9.8.5 Facilitation.

9.8.6 Gaining a Consensus on the Risks, the Opportunities and their Interdependencies -- 9.8.7 Risk Register -- 9.9 Summary -- 9.10 References -- 10 Risk Analysis: Stage 3 -- 10.1 Process -- 10.2 Process Goal and Subgoals -- 10.3 Process Definition -- 10.4 Process Inputs -- 10.5 Process Outputs -- 10.6 Process Controls (Constraints) -- 10.7 Process Mechanisms (Enablers) -- 10.7.1 Probability -- 10.8 Process Activities -- 10.8.1 Causal Analysis -- 10.8.2 Decision Analysis and Influence Diagrams -- 10.8.3 Pareto Analysis -- 10.8.4 CAPM Analysis -- 10.8.5 Define Risk Evaluation Categories and Values -- 10.9 Summary -- 10.10 References -- 11 Risk Evaluation: Stage 4 -- 11.1 Process -- 11.2 Process Goal and Subgoals -- 11.3 Process Definition -- 11.4 Process Inputs -- 11.5 Process Outputs -- 11.6 Process Controls (Constraints) -- 11.7 Process Mechanisms (Enablers) -- 11.7.1 Probability Trees -- 11.7.2 Expected Monetary Value -- 11.7.3 Utility Theory and Functions -- 11.7.4 Decision Trees -- 11.7.5 Markov Chain -- 11.7.6 Investment Appraisal -- 11.8 Process Activities -- 11.8.1 Basic Concepts of Probability -- 11.8.2 Sensitivity Analysis -- 11.8.3 Scenario Analysis -- 11.8.4 Simulation -- 11.8.5 Monte Carlo Simulation -- 11.8.6 Latin Hypercube -- 11.8.7 Probability Distributions Defined from Expert Opinion -- 11.9 Summary -- 11.10 References -- 12 Risk Treatment: Stage 5 -- 12.1 Process -- 12.2 Process Goal and Subgoals -- 12.3 Process Definition -- 12.4 Process Inputs -- 12.5 Process Outputs -- 12.6 Process Controls (Constraints) -- 12.7 Process Mechanisms -- 12.8 Process Activities -- 12.9 Risk Appetite -- 12.10 Risk Response Strategies -- 12.10.1 Risk Reduction -- 12.10.2 Risk Removal -- 12.10.3 Risk Reassignment or Transfer -- 12.10.4 Risk Retention -- 12.11 Summary -- 12.12 References -- 13 Monitoring and Review: Stage 6 -- 13.1 Process.

13.2 Process Goal and Subgoals.