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? Purchase the answer to view it Purchase the answer to view it

In developing a risk management framework for Blue Wood Chocolates and Kilgore Custom Milling, it is essential to identify the key personnel responsible for leading the process. A Chief Risk Officer (CRO) would be an appropriate choice to oversee the risk management efforts in both companies.

The CRO is the executive responsible for identifying, assessing, and managing risks across an organization. This role is crucial in establishing a robust risk management framework as it requires a deep understanding of the company’s operations, industry, and potential risks.

In Blue Wood Chocolates, the CRO could be appointed from within the company’s existing leadership team. This individual should have a comprehensive understanding of the chocolate manufacturing industry, supply chain management, and financial implications. The CRO should have access to all levels of the organization to ensure effective risk identification and assessment.

Similarly, in Kilgore Custom Milling, a CRO should be designated to lead the risk management process. This individual should possess extensive knowledge of milling operations, market volatility, and financial risk mitigation strategies. The CRO should have access to all relevant departments and be able to communicate effectively with key stakeholders.

For smaller companies without the resources for a dedicated CRO, alternative arrangements can be made to address enterprise risk management (ERM). One option could be to assign the responsibility to an existing executive or shared between a few key individuals within the organization. These individuals should have the necessary expertise and authority to drive the risk management process effectively.

In such cases, it is crucial to provide ongoing training and support to these individuals to develop their understanding of risk management principles and practices. Additionally, smaller companies may benefit from outsourcing certain risk management functions to external consultants or engaging with industry associations to access specialized knowledge and resources.

The role of the board of directors is pivotal in the risk management process. Boards should ensure that a strong risk management framework is developed and implemented effectively. They should provide oversight and guidance on risk identification, assessment, mitigation, and monitoring. Additionally, boards should ensure that the risk management efforts align with the company’s strategic objectives and risk appetite.

Boards should also establish regular reporting mechanisms to review and track key risk indicators, as well as to receive updates on the effectiveness of risk mitigation measures. The board’s involvement in risk management demonstrates their commitment to sound corporate governance and helps instill a risk-aware culture throughout the organization.

In conclusion, an effective risk management framework requires the appointment of a CRO who possesses the necessary expertise and authority to manage risks. In smaller companies, alternative arrangements can be made to address ERM. The board of directors plays a crucial role in providing oversight, guidance, and support throughout the risk management process.