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MAKING ENTERPRISE RISK MANAGEMENT PAY OFF:
HOW LEADING COMPANIES IMPLEMENT RISK MANAGEMENT
by Thomas L. Barton, William G. Shenkir, Paul L. Walker

“Lessons in risk management from world-class practitioners.

“Risk managers can no longer operate in a vacuum: they must understand all the
risks that impact today's enterprise, and involve all of the firm's leaders in
managing those risks. Enlightened companies are meeting these challenges
through enterprise risk management: a set of revolutionary techniques that go
beyond mere "control" to contribute measurable business value.

This book takes you behind the scenes at companies that are leading the way in
developing and deploying enterprise risk management. You'll learn how they're
developing new tools for identifying today's new risks; how they're improving the
accuracy of their risk assessments and recalibrating their responses-and how
enterprise risk management can identify not just debacles and "downsides," but
breakthrough growth opportunities as well.

- Making risk management strategic, not defensive: from "control" to "value
enhancement"

- Enterprise risk management: Integrated, continuous, and broadly focused:
Moving risk management out of its traditionally disconnected "silos": how to do it,
and why you must

- New tools for identifying, ranking, and measuring risks: Leading-edge
approaches from Chase Manhattan, Microsoft, DuPont, Unocal, and other leaders

- Risk management in an era of unprecedented, unrelenting change: Managing
the risks of globalization, interdependence, technological and marketplace change,
and political and socioeconomic uncertainty.”

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Part of a new series of books sponsored by the Financial Executives Research
Foundation, a nonprofit affiliate of Financial Executives International, the
preeminent professional association for senior financial executives, representing
15,000 financial executives worldwide. The Research Foundation, established in
1944, funded the research and case studies in this book.

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- Integrating risk management across the entire enterprise
- The new roles and responsibilities of financial executives in enterprise risk
management
- New areas of risk—and how to assess them rationally
- Scenario analysis, gain/loss curves, earnings-at-risk measurement, and other
powerful new measurement tools
- Includes five in-depth case studies: Chase Manhattan, DuPont, Microsoft,
Unocal, and United Grain Growers

“Today, companies are called upon to manage an assortment of risks that would
have been unimaginable even a decade ago. The solution is enterprise risk
management, in which risk management activities are understood by—and
integrated throughout—the entire organization.

“In this book, three leading practitioners present an accessible, case study-based
introduction to this powerful new approach. They introduce the fundamental
concepts and rationale underlying enterprise risk management, offer a concise
overview of today's best techniques, and synthesize key lessons that can be
learned from early adopters. Next, they present five in-depth case studies showing
enterprise risk management at work in five key industries: Chase Manhattan in
financial services, E.I. du Pont de Nemours & Company in manufacturing,
Microsoft in information technology, United Grain Growers, Ltd. in food, and Unocal
in energy.

“Today, financial professionals are transforming risk management from a narrowly
focused control function to a key source of business value. Making Enterprise Risk
Management Pay Off gives you tools and insights for making it happen in your
organization.

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"The authors go out of their way to avoid a jargon-filled technical discussion...
blending interesting company history and extensive quotes from senior
management interviews with discussions of the company's enterprise risk
management system. Although this book serves best as a risk management
resource for senior managers, its value goes well beyond that audience." -
Barron's, May 7, 2001

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"...does a fine job of analyzing enterprise-wide risk management, the most
noteworthy management development in many years." - Internal Auditing,
May/June 2001

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CONTENTS

1. Introduction.
2. Lessons Learned From Case Studies
3. Chase Manhattan Corporation
4. E.I. du Pont de Nemours and Company
5. Microsoft Corporation
6. United Grain Growers Limited
7. Unocal Corporation
8. Conclusion
Appendix A. Enterprise-wide Risk Management Interview Protocol.
Appendix B. References.
Appendix C. Annotated Bibliography.
About the Authors
Acknowledgments
Index

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ABOUT THE AUTHORS

“THOMAS L. BARTON is Kathryn and Richard Kip Professor of Accounting and
KPMG Research Fellow of Accounting at the University of North Florida. He holds
a Ph.D. in accounting from the University of Florida and is a certified public
accountant (CPA). Dr. Barton has over 35 professional publications, including
research articles in Barron's, Decision Sciences, Abacus, Advances in
Accounting, CPA Journal, and Management Accounting. He coauthored the 1998
Financial Executives Research Foundation study, Open Book Management:
Creating an Ownership Culture. He received the Lybrand Silver Medal for his
article, "A System is Born: Management Control at American Transtech." Dr.
Barton is the creator of the Minimum Total Propensity to Disrupt method of
allocating gains from cooperative ventures. This method has been the subject of
several articles in Decision Sciences. He is also a recognized expert in the
application of management controls to highly creative activities. Dr. Barton has
taught over 100 professional development seminars and has extensive consulting
experience with a wide cross section of organizations in the public and private
sectors. Dr. Barton is the recipient of several teaching awards for his
undergraduate and graduate work. He was a winner of the State University System
of Florida's prestigious Teacher Incentive Program award in 1994, the program's
inaugural year.”

“WILLIAM G. SHENKIR is William Stamps Farish Professor of Free Enterprise at
the University of Virginia's McIntire School of Commerce. He was dean of the
McIntire School from 1977 to 1992, and was formerly Technical Advisor and
Project Director for the Financial Accounting Standards Board. Shenkir's research
and consulting interests include management accounting, open book
management, and risk management. He has served as Faculty Fellow for Price
Waterhouse and Exxon; as auditor for the United States Air Force Auditor
General's office; and on the board of directors for Dominion Bankshares
Corporation, First Union National Bank of Virginia, and ComSonics. His
publications include Open-Book Management: Creating An Ownership Culture
(with Thomas L. Barton and Thomas N. Tyson).”

“PAUL L. WALKER is Associate Professor of Accounting at the University of
Virginia's McIntire School of Commerce. His research and consulting interests
include audit markets, audit failures, and auditor independence, as well as audit
regulation, risk, and fees. He has served in the Audit Division at Ernst & Young, in
the Tax Division at KPMG Peat Marwick, and in the Securities Clearance &
Operations, Internal Audit, Data Processing organization at InterFirst Bank, Dallas,
TX.”

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2002, 257 pages. Order #DR714.
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Risk Management, Business Impact

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