Chapter 18 presented special risk management issues with Blue Wood Chocolates, and chapter 19 presented various financial risks at Kilgore Custom Milling. If Blue Wood Chocolate and Kilgore Custom Milling are to develop a risk management framework, who should lead the process at each company? Should a Chief Risk Officer (CRO) be appointed? If so, to whom should he/she report and have access to? How could smaller companies without the resources for a dedicated CRO deal with ERM? What is the role for the board in such a process? To complete this assignment, you must do the following: A) Create a new thread. As indicated above, if Blue Wood Chocolate and Kilgore Custom Milling are to develop a risk management framework, who should lead the process at each company? Should a Chief Risk Officer (CRO) be appointed? If so, to whom should he/she report and have access to? How could smaller companies without the resources for a dedicated CRO deal with ERM? What is the role for the board in such a process? .

In developing a risk management framework for Blue Wood Chocolate and Kilgore Custom Milling, it is essential to identify the individuals who should lead the process. One option to consider is the appointment of a Chief Risk Officer (CRO). A CRO is a senior executive responsible for overseeing the organization’s risk management activities and ensuring that the appropriate strategies are in place to address potential risks.

In the case of Blue Wood Chocolate, the CRO could be someone with expertise in the food industry, specifically in chocolate production and manufacturing. This individual should have a thorough understanding of the company’s operations, supply chain, and market dynamics to effectively identify and mitigate risks. The CRO would be responsible for leading the risk management initiative, coordinating with various departments to assess and manage risks, and developing risk mitigation strategies.

At Kilgore Custom Milling, the CRO could be a professional with experience in the milling industry. This person would need to have a deep understanding of the company’s milling operations, quality control processes, and industry regulations. They would play a crucial role in leading the risk management process, working with different departments to identify and evaluate risks, and developing strategies to mitigate them.

The appointment of a CRO ensures that risk management is given adequate attention and expertise within the organizations. The CRO should have direct access to the CEO or the board of directors to effectively communicate the risks identified and the corresponding strategies to address them. This level of access allows the CRO to influence decision-making and ensure that risk management is integrated into the company’s overall strategic planning process.

However, smaller companies without the resources for a dedicated CRO may face challenges in implementing extensive enterprise risk management (ERM) processes. In such cases, it may be necessary to assign the responsibility of risk management to a specific individual or department within the organization. This person should have a solid understanding of the company’s operations and should be responsible for identifying and managing risks on a day-to-day basis.

In smaller companies, it is crucial for the board of directors to play an active role in the risk management process. The board should provide oversight and guidance, ensuring that risk management policies and procedures are effectively implemented. They should review and approve the risk management framework, including key risk indicators, risk appetite, and mitigation strategies. Additionally, the board should encourage a culture of risk awareness and accountability throughout the organization.

In conclusion, the appointment of a CRO can be beneficial for companies like Blue Wood Chocolate and Kilgore Custom Milling to develop a robust risk management framework. However, smaller companies may need to assign risk management responsibilities to specific individuals or departments. Regardless of the approach, the board of directors should have an active role in overseeing the risk management process and ensuring that it aligns with the company’s strategic objectives.

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