Enterprise Risk Management -- Contents -- Preface -- Acknowledgments -- Section One Risk Mangement in Context -- Chapter 1 Introduction -- The Benefits of Risk Management -- Reason #1: Managing Risk Is Management's Job -- Reason #2: Managing Risk Can Reduce Earnings Volatility -- Reason #3: Managing Risk Can Maximize Shareholder Value -- Reason #4: Risk Management Promotes Job and Financial Security -- Integration Adds Value -- Cautionary Tales -- The Shortsightedness of Bausch & Lomb -- The Curtains Close on Kidder, Peabody -- Meltdown at Metallgesellschaft -- Morgan Grenfell's Asset Mismanagement -- Société Générale Blindsided -- MF Global Goes Under -- Chapter 2 Lessons Learned -- Lesson #1: Know Your Business -- Lesson #2: Establish Checks and Balances -- Lesson #3: Set Limits and Boundaries -- Lesson #4: Keep Your Eye on the Cash -- Lesson #5: Use the Right Yardstick -- Lesson #6: Pay for the Performance You Want -- Lesson #7: Balance the Yin and the Yang -- Chapter 3 Concepts and Processes -- Risk Concepts -- Exposure -- Volatility -- Probability -- Severity -- Time Horizon -- Correlation -- Capital -- Risk Processes -- Risk Awareness -- Set the Tone from the Top -- Ask the Right Questions -- Establish a Risk Taxonomy -- Provide Training and Development -- Link Risk and Compensation -- Risk Measurement -- Losses -- Incidents -- Risk Assessments -- Key Risk Indicators -- Risk Control -- Support Business Growth -- Support Profitability -- Control Downside Risks -- Risk Is a Bell Curve -- Chapter 4 What Is ERM? -- ERM Definitions -- The Benefits of ERM -- Organizational Effectiveness -- Risk Reporting -- Business Performance -- The Chief Risk Officer -- Components of ERM -- Corporate Governance -- Line Management -- Portfolio Management -- Risk Transfer -- Risk Analytics -- Data and Technology Resources -- Stakeholder Management.

Section Two The Enterprise Risk Management Framework -- Chapter 5 Corporate Governance -- Codes of Conduct -- Best Practices -- Stakeholder Communication -- Board Independence -- Board Performance Assessment -- Executive and Board Compensation -- Linking Corporate Governance and ERM -- Risk Appetite and Policy -- Organizational Structure -- Risk Culture and Corporate Values -- Chapter 6 Line Management -- The Relationship between Line and Risk Functions -- Offense and Defense -- Policy and Policing -- Partnership Model -- Key Challenges -- Conflict Resolution -- Line Risk Management -- Incentive Alignment -- Nonfinancial Risk Measurement -- Best Practices -- Strategy and Planning -- Product and Business Development -- Product Pricing -- Business Performance Measurement -- Risk and Incentive Compensation -- Chapter 7 Portfolio Management -- The Theory of Active Portfolio Management -- Benefits of Active Portfolio Management -- Unbundling -- Risk Aggregation -- Risk Limits and Asset Allocation -- Influencing Transfer Pricing, Capital Allocation, and Investment Decisions -- Practical Applications of Portfolio Management -- Reinsurance -- Currency Hedging -- Chapter 8 Risk Transfer -- A Brief History of ART -- Advantages of ART -- Focus -- Customization -- Cost Reduction and Simplified Administration -- Earnings Stability -- Pitfalls of ART -- Understand the Product -- Know the Seller -- Regulatory and Accounting Standards -- A Look to the Future -- Case Study: Honeywell -- Case Study: Barclays -- Chapter 9 Risk Analytics -- Risk Control Analytics -- Scenario Analysis -- Economic Capital -- Risk Indicators -- Risk Optimization Analytics -- Risk-Adjusted Return on Capital -- Economic Income Created -- Shareholder Value and Shareholder Value-Added RAROC and EIC -- Market Risk Analytics -- Interest Rate Models -- Value-at-Risk Models.

Asset/Liability Management Models -- Credit Risk Analytics -- Credit-Scoring Models -- Credit Migration Models -- Counterparty Credit Exposure Models -- Credit Portfolio Models -- Financial and Econometric Models -- Actuarial Models -- Operational Risk Analytics -- Top-Down Approaches -- Bottom-Up Approaches -- GRC Systems -- Chapter 10 Data and Technology -- Early Systems -- Data Management -- Interface Building -- Middleware -- Distributed Architectures -- Key Factors for a Successful Implementation -- Chapter 11 Stakeholder Management -- Employees -- Recruiting and Screening -- Training and Development -- Retention and Promotion -- Firing and Resignation -- Customers -- Acquisition and Retention -- Loyalty and Satisfaction -- Know Your Customer -- Handling Crisis -- Regulators -- Rating Agencies -- Shareholder Service Providers -- Business Partners -- Evaluating an Alliance -- Finding the Right Partner -- Monitoring Progress -- Section Three Risk Management Applications -- Chapter 12 Credit Risk Management -- Key Credit Risk Concepts -- Exposure, Severity, and Default -- Expected Loss -- Unexpected Loss -- Reserves and Economic Capital -- Off-Balance Sheet Credit Risk -- The Credit Risk Management Process -- Policy and Infrastructure -- Credit Granting -- Monitoring and Exposure Management -- Portfolio Management -- Credit Review -- Basel Requirements -- Best Practices in Credit Risk Management -- Basic Practice -- Standard Practice -- Best Practice -- Case Study: Export Development Corporation (EDC) -- Lines of Business -- Credit Risk at EDC -- EDC 's Credit Risk Policy Manual -- EDC 's Statement of Credit Risk Philosophy -- Chapter 13 Market Risk Management -- Types of Market Risk -- Market Risk Measurement -- Gap Analysis -- Duration -- Value-at-Risk -- Calculating VaR -- Three Flavors of VaR -- Estimating the Market Risk of Extreme Events.

Stress Testing -- Scenario Analysis -- Verifying the Measurements: Back-Testing -- Conditional Value-at-Risk (CVaR) or Expected Shortfall -- Two Useful Rules of Thumb -- Market Risk Management -- Policies -- Best Practices in Market Risk Management -- Basic Practice -- Standard Practice -- Best Practice -- Case Study: Market Risk Management at Chase -- Risk Measurement and Management -- Obstacles and Successes -- A Look to the Future -- Chapter 14 Operational Risk Management -- Operational Risk-Definition and Scope -- Process Risk -- People Risk -- System Risk -- Event Risk -- Business Risk -- The Operational Risk Management Process -- Risk Policy and Organization -- Risk Identification and Assessment -- Capital Allocation and Performance Measurement -- Risk Mitigation and Control -- Risk Transfer and Finance -- Best Practice in Operational Risk Management -- Basic Practice -- Standard Practice -- Best Practice -- Emerging IT Risks -- Cyber Security -- Cloud Computing -- Social Media -- Case Study: Heller Financial -- Changes Within the Organization -- ERM and Operational Risk Management -- Heller's Evolving Risk Profile -- Objectives of ERM -- Organizational Changes -- Components of the ERM Project -- Implementation Phase -- Post Note -- Chapter 15 Business Applications -- Stage I: Minimizing the Downside -- Stage II: Managing Uncertainty -- Stage III: Performance Optimization -- The Further Evolution of Risk Management -- Chapter 16 Financial Institutions -- Industry Trends -- Consolidation -- Deregulation -- Competition -- Convergence -- Risk Management Requirements -- Risks by Industry Sector -- Cross-sector Risks -- Systemic Risk -- A Look to the Future -- Case Study: CIBC -- Chapter 17 Energy Firms -- Industry Trends -- Risk Management Requirements -- Price and Volume Risks -- Event and Weather Risks -- Risk Sharing -- Optionality -- Basis Risk.

Price Transparency -- A Look to the Future -- Lessons Learned from Enron -- Keep Your Eye on the Cash -- Manage All of Your Risks -- Get Auditors Back to Basics -- Lessons Learned from the BP Oil Spill -- Chapter 18 Non-Financial Corporations -- Risk Management Requirements -- Credit Risks -- Market Risks and Hedging -- Stock Price Risk -- Investment Risks -- Hedging Risks -- Secondary Risks -- Operational and Insurable Risks -- Catastrophic Failures -- Business Risk -- Cultural Risks -- Pension Risks -- Outsourcing -- Reputational Risks -- Best Practices in Corporate Risk Management -- Risk Identification and Assessment -- Quantification and Reporting -- Management And Control -- Case Study: Microsoft -- Case Study: Ford -- Case Study: Airbus and Boeing -- Section Four A Look to the Future -- Chapter 19 Predictions -- The Profession of Risk Management -- A Career In Risk Management -- Education and Evangelism -- Technology and the Convergence of Risk Management -- Ten Predictions -- 2013 Looking Back -- Chapter 20 Everlast Financial -- Section Five ERM Implementation -- Chapter 21 ERM Implementation -- Benefits of Corporate Governance and ERM Practices -- McKinsey & Company (2002) -- Brown and Caylor (2004), Cheng and Wu (2005) -- Hoyt and Liebenberg (2009) -- Standard & Poor's (2010) -- ERM Implementation Requirements -- Definitions of Risk and ERM -- Governance Structure and Policies -- Risk Assessment and Quantification -- Risk Management -- Reporting and Monitoring -- ERM Maturity Model -- Stage 1: Definition and Planning (White Belt) -- Stage 2: Early Development (Yellow Belt) -- Stage 3: Standard Practice (Green Belt) -- Stage 4: Business Integration (Brown Belt) -- Stage 5: Business Optimization (Black Belt) -- Other ERM Maturity Models -- Risk Culture -- Chapter 22 Role of the Board -- Board Oversight Requirements -- Current Board Practices.

Case Study: JP Morgan Chase.