Applying Enterprise Risk Management on a Fiber Board Manufacturing Industrial Case

Abstract

The study assesses the enterprise risk management (ERM) process of a fiber board manufacturing company. The objective is to practically demonstrate how a risk framework can be applied to find the key risks affecting the company. An understanding of the fiber board industry is established by reviewing the proxy disclosures of global corporations to see how they foresee the risks to the industry in general. The current state of the ERM process of the company is then evaluated by applying the COSO 2004 risk assessment framework - the company's ERM process are mapped on a maturity model scale, roles and responsibilities of the board of directors and important risk management concepts are discussed and measured in practice. A risk assessment is undertaken with the help of risk gathering techniques to create a risk profile of the major risks affecting the company which are illustrated through heat maps. Finally, benchmarked studies are used to conduct a gap analysis of the risk findings to conclude that the management has to re-address its focus towards HR -employee motivation, working capital mismanagement, sales-production planning inefficiencies and a less likely but high impacting terrorism risk for which the company is currently not prepared. Recommendations for key risk indicators are suggested along with direction for future work.