Text book: Chapter 18 from above textbook 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 of the board in such a process? To complete this assignment, you must do the following: 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? ANSWER ALL OF THE QUESTIONS ABOVE IN YOUR RESPONSE. NOTE: These discussions should be informal discussions, NOT research papers. If you MUST directly quote a resource, then cite it properly. Minimun 2 pages

The development of a risk management framework for Blue Wood Chocolates and Kilgore Custom Milling requires careful consideration of the roles and responsibilities of key individuals within each organization. Specifically, the question arises as to whether a Chief Risk Officer (CRO) should be appointed and, if so, who they should report to and have access to. Additionally, smaller companies without the resources for a dedicated CRO need to find alternative ways to deal with enterprise risk management (ERM). Finally, the role of the board in managing risk should be analyzed.

In the case of Blue Wood Chocolates, appointing a CRO would be beneficial in effectively managing the company’s risk. The CRO would be responsible for overseeing and coordinating risk management efforts, ensuring that all areas of the organization are adequately covered. They should report directly to the CEO or another high-level executive to ensure that risk management efforts receive the necessary attention and support. By having access to various departments and executives throughout the organization, the CRO can effectively identify and mitigate risks on a company-wide basis.

Similarly, for Kilgore Custom Milling, the appointment of a CRO is crucial in developing a risk management framework. The CRO should report to the CEO or another senior executive, ensuring that risk management efforts are integrated into the overall strategic decision-making process. They should have direct access to the executive team and the board, enabling them to provide regular updates on risk management initiatives and seek guidance and support as needed.

For smaller companies without sufficient resources for a dedicated CRO, alternative approaches to ERM can be adopted. One option is to assign the responsibility for risk management to an existing executive or management team. This individual or team should have a thorough understanding of the business and its unique risks and should prioritize risk management in their day-to-day activities. Additionally, smaller companies can seek external expertise through outsourcing risk management functions to specialized consultants or utilizing software tools to streamline the risk management process.

The role of the board in the risk management process is crucial in both Blue Wood Chocolates and Kilgore Custom Milling. The board should provide oversight and guidance in defining the company’s risk appetite and tolerance levels. They should review and approve the risk management framework, ensuring that it aligns with the company’s strategic objectives and regulatory requirements. The board should also monitor key risk indicators and receive regular reports from the CRO or relevant executives, allowing them to make informed decisions to mitigate risks and safeguard the company’s interests.

In conclusion, the development of a risk management framework for Blue Wood Chocolates and Kilgore Custom Milling requires thoughtful consideration of the roles and responsibilities of various individuals within the organizations. The appointment of a CRO is recommended for both companies, with the CRO reporting to the CEO or high-level executive. Smaller companies without a dedicated CRO can explore alternative approaches to ERM, such as assigning responsibility to an existing executive or seeking external expertise. The board has a crucial role in overseeing and guiding the risk management process, ensuring alignment with strategic objectives and regulatory requirements.

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