Enterprise Risk Management

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COVER PAGE

TABLE OF CONTENTS

EXECUTIVE SUMMARYPage.3

1. INTRODUCTIONPage.4
2. PROBLEM STATEMENTPage.4
3. RESEARCH AIMSPage.5
4.1. Assumptions and Scope of the study
4. CASE BRIEF: POWEOPage.5
5.2. The French Electricity Market
5.3. Poweo
5. FINDINGSPage.8
6.4. ERM Components
6.5. Technological Components
6. ANALYSISPage. 16
7.6. Action Plan
7.7. Further Steps
7. CASE BRIEF: ROLLS ROYCEPage. 22
8.8. Profile
8.9. ERM Implementation
8.10. ERM Components
8.11. Benchmarking
8.12. Action Plan
8.13. Best Practices
8. RECOMMENDATIONSPage. 28
9. LIMITATIONS OF THE STUDYPage. 29
10. CONCLUSIONPage. 30

REFERENCES
APPENDIX
EXECUTIVE SUMMARY

The globalized nature of businesses has led to an exponential increase in the number and types of risk that need to be mitigated by firms in order for them to secure their short and long term success. Where the principles and practices of risk management have been substantially studied and developed in context to financial institutions, the traditional models do not suffice against the complexity, interdependency and simultaneous occurrences of risks in the energy sector that allows for their exploitation as potential opportunities. Thus it is imperative, in the formulation of appropriate strategies to achieve growth and attain a competitive edge in the market, that a more comprehensive and integrated approach be taken in the consideration of ‘non-linear’ potential impacts of risks on all levels of the business. This ‘portfolio view’ of risk is best outlined within the model of Enterprise Risk Management (ERM) with particular focus on its application within firms as a technological solution. The premise for such an approach lies in the reconceptualization of the value proposition to firms from a tactical stance to a strategic one, rendering it a more robust management tool.

The context of the research to be conducted was in direct correlation to the challenges and opportunities faced by the French alternative electricity and gas operator, Poweo in 2010 with hindsight to its own market development since the commencement of its operations there in 2002. The paper will take into consideration the various factors affecting business operations that have impeded its continued growth in the market and make suitable recommendations on this basis as to the steps it can take to ensure its future success.

1. Introduction
A crucial aspect in the efforts of firms to sustain themselves in the face of increasingly volatile forces in the marketplace has long since lingered on their ability to mitigate potential risks that surround them. With the attention required to cope with the wide array of complexly-intertwined political, economic, social, technological, environmental and legal factors that may progress or inhibit their growth whilst prioritizing the needs and wishes of their respective consumer segments, it is no longer feasible to rely solely on human judgement to formulate effective strategies in a manner that is able to simultaneously incorporate these various facets into a single plan of action (Teuten, 2005). Particularly within relatively new markets, such as that of renewable energy, players are usually subject to numerous obstacles that make it difficult for them to compete effectively with their more traditionally-established counterparts. Thus it is imperative for them to take advantage of all potential opportunities in accordance with available resources, which can only be done through an elaborate system capable of analysing the impact of these various factors in lieu of each strategic approach intended to be taken. Enterprise Risk Management (ERM) is one such solution that has been found to considerably enhance the management of uncertainties surrounding...
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