Enterprise Risk Management at Hydro One Harvard Case Solution & Analysis

Enterprise Risk Management at Hydro One Case Study Solution

In addition to this, the corporations without ERM need to involve the individuals so that they would report and manage the risk al across the operational business units. In contrast, the corporations with ERM can improve the tools and framework used to perform the functions of the critical risk management in a consistent manner. It is significantly important for the organization to eliminate the redundant process, in doing so the organization would be able to improve the efficiency by allocating the right amount of resources in order to mitigate the risk.

The company that implements the ERM process would most likely have;

  • A greater likelihood of attaining the objectives of company
  • Consolidated risk reporting at different board level
  • Improved understanding of uncertainty and risk facing by organization and greater ability to effectively respond to risk
  • More informed decision making and risk taking
  • Improved compliance with reporting, regulatory and legal requirements.
  • Increased effectiveness and efficiency of business operations
  • Help assuring stability and neglect surprises
  • Improve communication between management and board
  • The efficient allocation of resources on the basis of the risk priorities

Shortly, the ERM practices are supposed to be the prerequisite for risk management and sound governance. Since, there are number of players within an organization who are involved with risk, and without implementing ERM as a guide in place, it would not be realistic for the company to expect from them to perform in a comprehensible and coherent way (Mikes, 2012)

Strengths and Weaknesses of Hydro One’s Three Phase ERM Process

Considering the Hydro One’s three phase ERM process which includes regular update of corporate risk profile, workshop and risk based investment appraisal and planning, the strength and weaknesses are as follows;

Strengths:

The strengths of the 3 phase ERM process are

  • These are the formal approaches which are easy to understand and use by the management of the company.
  • The top management of the company is highly involved in these ERM process
  • It is qualitative and simple approach that can be used by every manager
  • The Enterprise Risk Management (ERM) process most likely gives security and high visibility
  • Such process tends to review the risk profile of the company on regular basis.

Weaknesses

The weaknesses of the 3 phase ERM process are

  • One of the weakness of the 3 phase ERM process is that the process are limited to the upper management of the company, hence not fully communicated down the corporate leadership.
  • The risk experts can only be involved until and unless the risks and uncertainties are established by others.
  • Another weakness is that the highest risk are prioritize in means of finding options to mitigate the risk

Key Takeaways

After taking into consideration the complete evaluation of the ERM process at Hydro One, it is to remember that the organizations should implement the ERM process for the risk management in effective manner. The ERM process is better coordinated and rationale process to allocate the capital as well as led to the improved credit rating. The process also helps the organization in risk awareness as a significant part of the corporate culture. Since, the workers were aware of the risk and threats that has been facing by company in its daily business operations than management, so the company should mobilize and engage the broad base of employees and managers in ERM process in order to sort key threats and risk and establish the options faster.

Exhibit A – Risk and Uncertainties

Exhibit B – Strengths & Weaknesses

StrengthsWeaknesses
      Easy to understand and use

High involvement of top management

Qualitative and simple approach

High visibility & security

Review the risk profile regularly

      Limited to the upper management of the company

Prioritizing highest risk to find option

 

 

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