ENTERPRISE RISK MANAGEMENT

MCCI – BLOEMFONTEIN 29 OCTOBER 2013

ARTHUR ELS – Enterprise Risk Actuary

Managing Director and Senior Actuary at Arthur Els and Associates; a medium-sized firm of Consulting Actuaries and Enterprise Risk Actuaries based in Johannesburg. Clients of the Company include a number of the Top 100 Companies in South Africa.

Arthur is one of the few qualified Enterprise Risk Actuaries in the country. His Company is one of only two practices currently in South Africa offering clients actuarially-based Enterprise Risk Management expertise which is underpinned by the advanced CERA qualification.

The business world

is constantly evolving

and GROWING

everyday.

more complex

So shouldn’t

the approach

to MANAGING RISK

evolve as well?

The post-9/11 business world is one of

Organisations will increasingly rely on high level risk professionals who are independent, impartial to assure stakeholders of their sustainability

– Increasingly stringent regulatory standards

– a rapidly globalising marketplace and

– more demanding and active stakeholders

and OPTIMISE risk to meet the company’s mission and objectives / goals.

ENTERPRISE RISK MANAGEMENT

Risk Analysis

Risk Identification

Risk EvaluationRisk Planning

Risk Management

ENTERPRISE RISK MANAGEMENT / CERA

Compile a detailed risk register Apply statistical techniques for

quantification of the risks Risk based modelling of future scenarios

EXAMPLE OF RISK REGISTER

Risk No.

Risk Class Description Max duration (yrs)

Impact Likelihood

Control measure

s

Inherent risk Residual risk

Risk ownerLevel Score Level Score

1 Governance Failure of Board of Directors to comply with King III requirements

3Damagin

gModerate

Fully controlle

d

Caution Low

9 OK 0Allan Jones

2 Regulatory Failure of Company to comply with statutory requirements.

25 Severe High Little Danger 16Dange

r12,8

Pat Smith

3 Fraud - internal

Fraud committed by employees 5

Damaging

High Good Danger 12 OK 3Xolani Jabu

4 Fraud - external

Fraud committed by outside persons, including customers and service providers

25Damagin

gHigh Little Danger 12

Caution

9,6Xolani Jabu

5 Project X Danger of project not being completed satisfactorily

1Damagin

gLow Good

Caution Low

6 OK 1,5Des

Plaatjes

The age of information has come and gone, replaced by the age of business intelligence, which heralds the age of innovation …

* CERA ~ CHARTERED ENTERPRISE RISK ACTUARY

The (CERA) credential encompasses the most

comprehensive and rigorous demonstration of

enterprise risk management (ERM) expertise available.

CERA

CERA’S complete a rigorous curriculum that covers probability, financial mathematics, micro / macro economics, construction of actuarial models, advanced finance and enterprise risk management, financial reporting and operational risk.

CERA represents insight, creativity and integrity. The “CERA” letters after someone’s name indicate to the business world that there is no other type of risk professional better equipped to take a 360-degree view of an organisation’s risk profile.

CERAS ARE ADVANCING THE ERM FIELD

Enable organisations to be more transparent

Help companies adequately meet strict financial reporting and control requirements

ADDRESS SECURITY AND TECHNOLOGY ISSUES

Prepare for disaster and business continuity in a post-9/11 world

Help companies remain competitive in the globalised marketplace

THE TOP FIVE CONSTRAINTS* TO ACHIEVING BUSINESS OBJECTIVES

Cost of doing business Currency volatility Macroeconomic uncertainty General skills shortage Labour unrest

* Source – www.barloworld-logistics.com 2013 Supply Chain Foresight

THE TOP FOUR CONSTRAINTS* TO ACHIEVING SUPPLY CHAIN OBJECTIVES

Cost of transport Available supply chain skills Labour unrest Efficiency of ports and harbours

* Source – Barloworld Logistics 2013 Supply Chain Foresight

CERAS focus on how operational risk, investment risk, strategic risk, and reputational risk collectively impact an organisation.

CERAS ARE QUALIFIED FOR POSITIONS AS RISK ANALYST, RISK MANAGER AND CHIEF RISK OFFICER IN FIELDS SUCH AS:

Broader Financial Services

Consulting Markets

Insurance and Reinsurance

Energy

CERAS ARE ALSO QUALIFIED IN FIELDS SUCH AS:

Transportation Media Technology Manufacturing Construction Healthcare

ENTERPRISE RISK MANAGEMENT / CERA

The determination of economic capital taking steps to mitigate undesirable risk likelihood of "black swan" events i.e. APPLYING extreme event theory

… The business world is constantly evolving ~ growing more complex – in terms of KING III code of governance - ethical leadership, responsible corporate citizenship, the governance of risk, the governance of information technology (IT) …..

… a window of

OPPORTUNITY

to MANAGING RISK

“The penalty for not having an intelligent strategy as a business is no longer slower growth. It is death. Innovation has become an even more important element of a Company’s life cycle, since to grow somebody else has to shrink. Competition in being original has just undergone a quantum leap”

~ Clem Sunter

“ ….. CHALLENGES BECOME OPPORTUNITIES WHEN THE RIGHT PEOPLE JOIN TOGETHER.”

LETS TALK

ARTHUR ELS AND ASSOCIATES

E-MAIL : ARTHUR.E@ARTHURELS.COM

WEBSITE : WWW.ARTHURELS.COM

CONTACT NUMBER : +27 11 441 2700