Components of the ERM Program at Rolls Royce
INTERNAL ENVIRONMENT
Management philosophy
Rolls-Royce management was heavily focused on safety and compliance. They proposed that
all projects must attach a risk register that analyzes the key risks and their potential
consequences. The risk registers are a review of business performance.
They established a structured approach to risk management, where risks were formally
identified and recorded in a corporate register; which was viewed and updated on a regular
basis and mitigation plans were proposed for all significant risks. External assessment carriedout
showed that the risk management process at Rolls-Royce more satisfied the Turnbull
compliance requirements (The Turnbull report was published by the Institute of Chartered
Accountants in English and Wales on the implementation of the international control
requirements of the combined code of corporate governance).
Risk appetite
Judging again from the management philosophy and style, it is clear that they had, in more or
less of a qualitative measure, a medium appetite for risk as they were not in the habit of
avoiding or accepting the total responsibility for very high risks (such as new product
development in the aerospace industry) but rather shared such very high risks amongst risk
relationship partners.
Oversight by Board of Directors
The director of operational risks oversaw all risks. The board of directors regularly reviewed
the group‟s exposure.
NOTE: The objectives have been set and likely events that may come-up in the course of achieving
these objectives identified, and thus the assessment is shown below. A summary sheet of the risk
categorization and description, objectives, assessment and response, monitoring and control as well as
benefits at Rolls Royce can be found in the Appendix section.
Components of the ERM Program at Rolls RoyceINTERNAL ENVIRONMENT Management philosophyRolls-Royce management was heavily focused on safety and compliance. They proposed thatall projects must attach a risk register that analyzes the key risks and their potentialconsequences. The risk registers are a review of business performance.They established a structured approach to risk management, where risks were formallyidentified and recorded in a corporate register; which was viewed and updated on a regularbasis and mitigation plans were proposed for all significant risks. External assessment carriedoutshowed that the risk management process at Rolls-Royce more satisfied the Turnbullcompliance requirements (The Turnbull report was published by the Institute of CharteredAccountants in English and Wales on the implementation of the international controlrequirements of the combined code of corporate governance). Risk appetiteJudging again from the management philosophy and style, it is clear that they had, in more orless of a qualitative measure, a medium appetite for risk as they were not in the habit ofavoiding or accepting the total responsibility for very high risks (such as new productdevelopment in the aerospace industry) but rather shared such very high risks amongst riskrelationship partners. Oversight by Board of DirectorsThe director of operational risks oversaw all risks. The board of directors regularly reviewedthe group‟s exposure.
NOTE: The objectives have been set and likely events that may come-up in the course of achieving
these objectives identified, and thus the assessment is shown below. A summary sheet of the risk
categorization and description, objectives, assessment and response, monitoring and control as well as
benefits at Rolls Royce can be found in the Appendix section.
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