Business Risk Management Handbook

Transcription

1 Business Risk Management Handbook A sustainable approach Linda Spedding Adam Rose i*" ""''SS^IH AMSTERDAM BOSTON HEIDELBERG LONDON NEW YORK OXFORD ELSEVIER PARIS SAN DIEGO SAN FRANCISCO SINGAPORE SYDNEY TOKYO CIMA Publishing is an imprint of Elsevier

2 Foreword About SERM and EFR About the authors Handbook overview Acknowledgements Abbreviations and acronyms xiii xv xvii xxi xxxv xxxvii Chapter 1 Introduction 1 Business risk overview 2 Definitions of risk 10 Part A Overview of Risk Management 15 Chapter 2 A Sustainable Enterprise Risk Management (SERM) system 17 Introduction to a SERM system 18 A Sustainable ERM strategy 22 The organisational benefits of a SERM system 25 The challenges facing the development of a SERM system 26 Chapter 3 Drivers and trends in sustainability risk management 29 Opening remarks 30 How to use the tools? 32 Chapter 4 Background to key aspects of legal risk management 65 Legal risk management 66 Legal risks 67 Risk identification 69 Risk evaluation 70 Risk management and risk recording 71 Implementing risk management systems 72 Critical factors for successful risk management 88 Governance and regulatory compliance: IT and risk management 90 Chapter 5 The relevance of due diligence 93 Company goals 94 Drivers for sustainable risk management 95 Risks and rewards of risk management: integration value post-merger 96 Successful acquisitions and competitive advantage 98 Cultural integration 101

3 Chapter 6 Risk and corporate organisational areas: an overview 103 The choice of vehicle and structure and liability in business 104 Risk management 106 Evolving board responsibilities 107 The English legal framework 107 Corporate manslaughter: a case study in risk 108 The business vehicle 109 The limited liability company 110 The Limited Liability Partnerships Act 112 Fiscal transparency 114 Key features of a partnership 115 The sole trader (the one man band) 117 Charities: issues of transparency 118 Accountability and corporate giving 121 Chapter summary 123 Part B Overview of the Economic Aspects of Business Risks 125 Chapter 7 Economic crime, bribery and corruption 127 The international framework 132 An introduction to the business risks 132 Surveys and case studies 134 International case study 137 The current situation: tackling international fraud and money laundering 142 Some solutions relevant to risk management 143 Corporate identity theft: the approach in the UK 147 Economic crime, transparency, openness and ethics and small business 150 Governance and CSR: an ethical business opportunity for SMEs 154 The opportunity for ethical business strategies 155 Company codes 157 Chapter summary 158 Chapter 8 Business interruption and risk management 161 Business interruption and recovery 162 Barriers to developing contingency plans 165 Insolvency and meaning 169 Business continuity and operational risk management 171 The evolution of risk management in practice 172 Crisis management a view from the US 176 Managing an environmental, health and safety crisis 176 Preventing an environmental, health and safety crisis 176 How crisis leads to liability 182 The public relations trap 183 The crisis management plan 183

4 Staying in business - insurance issues by David Kaye 187 Timeout of marketplaces while workplaces are reinstated 195 Educational programmes 197 Chapter summary 198 Chapter 9 Shareholder value and reputational risk 199 Introduction 200 Brand protection 202 Corporate governance 204 Stakeholders 206 Reputational risk 208 A SERM stakeholder reputation audit 211 Stakeholder risk analysis 215 Stakeholder review 216 Chapter summary 226 Chapter 10 Corporate power, business and marketing risks 229 Unrestrained use of corporate power risks 230 Adverse business practices risk 233 Adverse marketing practices risk 239 Chapter 11 Information technology (IT) and e-commerce: issues of risk management and corporate governance 247 Use of new technology risk 248 Risk management 250 New technology risk case studies 251 Managing liability issues 254 Consumer interests 255 Evidential issues 256 Design of a risk management framework 256 Business intelligence 257 Intellectual assets 258 Ongoing risks 260 Technology services in internet commerce 261 Nature of technology risks in internet commerce 262 Legal risk issues in internet commerce 263 Managing legal risk issues in internet commerce 263 Compliance relating to business continuity 264 Relationship with technology providers 265 Part C Overview of the Social Aspects of Business Risks 269 Chapter 12 Social and business ethic risk overview 271 The social aspects of business risk 272 The business context 274 Social and ethical risks and trends 274 Risk management best practice 279

5 Social and business ethical risks 280 Analysis of social, cultural and ethical risks 282 Case studies 284 Chapter summary 287 Chapter 13 Social and cultural risk management 289 Background and key concepts 290 What is strategy? 291 The strategic process 292 Aligning strategy 294 Why is strategy important for your organisation? 294 How to create and implement strategy in organisations 295 Strategic alliances 300 Culture clash in mergers and acquisitions (M&A): risk mitigation 301 Cultural due diligence 301 Culture, strategy outsourcing and off-shoring: the Indian case study 305 Chapter summary 311 Chapter 14 Human resources risk (human rights inside the workplace) 313 SERM risk overview 314 Risk management framework 317 Business benefits of diversity 322 Human rights standards relating to the workplace 323 What are the issues? 325 Chapter summary 345 Chapter 15 Human rights outside the workplace 347 SERM approach 348 The business opportunities 351 Human rights standards 352 Risk management and Organisational best practice 355 Best practice in the management of risks 359 Some contemporary risk issues 359 Chapter 16 Health and safety in the workplace 367 Introduction 368 Background 369 The business context 370 Health and safety risks and trends 371 Financial risk 372 Legal risks 373 Stakeholder and reputational risks 375 Risk management best practice 3 76 Health and safety management systems 377 Reporting the benefits of management systems to stakeholders 378

6 Health and safety risk 378 Categories of health and safety risk 378 A sustainable health and safety risk management system 396 Chapter 17 Health and safety of stakeholders and customers 401 External health risks to customers and the public 402 External safety issues: general public and customers 408 Analysis of historical health and safety liability risks 412 Risk case study emerging food health and safety issues by Raj Patel 418 Bioterrorism - a real threat to food supplies and public health by Vijay Sardana 425 Part D Overview of the Environmental Aspects of Business Risk 433 Chapter 18 Environmental risk management 435 Environmental due diligence and risk management 436 The new environmental environment 437 Regulatory approaches 440 Environmental risks and trends 443 Risk management best practice 451 Chapter summary 457 Chapter 19 Aspects of environmental risk 459 Risk analysis 460 An overview of scale of the risk 461 Categories of environmental risks 462 Environmental risk overview by sector 463 General environmental risk management techniques 464 Analysis of environmental risk 464 Chapter summary 512 Part E Case Studies of Business Risks 515 Chapter 20 Climate change - air pollution risk 517 The issue 518 A review of the main trends 520 The scale of the problem 523 The causes of greenhouse gas air pollution 524 Risks resulting from air pollution 524 Risk management 525 Risk management case studies 527 A business opportunity? 528 Carbon finance 529 The business opportunity from carbon trading 530

7 Chapter 21 UK corporate governance: reforms in the wake of corporate failures and the Enron case study 535 Corporate governance and sustainable risk management 537 Risk management and the Turnbull recommendations 538 Internal controls 539 The Enron case study 541 The background and framework 543 The Cadbury Report 544 The Greenbury Report 545 The Hampel Review 545 Modern company law for a competitive economy 545 The Combined Code 549 Listing Rules: comply or explain 550 Corporate governance in practice 551 The Company Law Reform Bill 552 Chapter summary 555 Chapter 22 Legal risk management in the US - the United States' response to the Enron collapse 557 Sarbanes-Oxley Act (SOX) 558 The positive effects of post-enron reforms 564 Overview of the reforms in the US 568 Chapter summary 571 Chapter 23 Corporate responsibility, corporate governance and emerging jurisdictions 573 Differing approaches to CSR 574 Relevance of UK developments and the OFR for CSR and governance 577 Corporations, economic drivers and directors' duties 578 Global application of CSR 579 CSR and sustainable development 580 How to implement the CSR and SD 582 The business case for CSR 582 Corporate governance and emerging jurisdictions 589 Chapter summary 609 Chapter 24 Conclusions and future trends 611 Introduction 612 Identifying trends, themes and risks 613 Building the business case for action 619 Implementing the business case 625 Monitoring and controlling 628 Chapter summary 635

8 Bibliography, references and websites 637 Glossary of terms 653 Appendices: A. About SERM 667 B. SERM rating model definitions 669 C. SERM risk analysis methodology in brief 675 D. SERM sample report methodology 685 E. Sectors ranked by risk 691 F. Institute of Risk Management - Business Continuity and Crisis Management syllabus 693 G. CBC framework for corporate governance for SMEs 701 H. OECD policy framework for investment 705 I. Transaction due diligence documentation 709 Index 715