Post on 16-Apr-2017
Trusted to deliver excellence
© 2016 Rolls-Royce plc and/or its subsidiaries
The information in this document is the property of Rolls-Royce plc and/or its subsidiaries and may not be copied or communicated to a third party, or
used for any purpose other than that for which it is supplied without the express written consent of Rolls-Royce plc and/or its subsidiaries.
This information is given in good faith based upon the latest information available to Rolls-Royce plc and/or its subsidiaries, no warranty or representation
is given concerning such information, which must not be taken as establishing any contractual or other commitment binding upon Rolls-Royce plc and/or
its subsidiaries.
Governance in Enterprise Risk
Management
APM Conference
Michael Lawrence
Trusted to deliver excellence
© 2016 Rolls-Royce plc and/or its subsidiaries
The information in this document is the property of Rolls-Royce plc and/or its subsidiaries and may not be copied or communicated to a third party, or
used for any purpose other than that for which it is supplied without the express written consent of Rolls-Royce plc and/or its subsidiaries.
This information is given in good faith based upon the latest information available to Rolls-Royce plc and/or its subsidiaries, no warranty or representation
is given concerning such information, which must not be taken as establishing any contractual or other commitment binding upon Rolls-Royce plc and/or
its subsidiaries.
About Rolls-Royce
Section 1
Michael Lawrence
Trusted to deliver excellence
© 2016 Rolls-Royce plc
The information in this document is the property of Rolls-Royce plc and may not be copied or communicated to a third party, or used for any purpose other
than that for which it is supplied without the express written consent of Rolls-Royce plc.
This information is given in good faith based upon the latest information available to Rolls-Royce plc, no warranty or representation is given concerning
such information, which must not be taken as establishing any contractual or other commitment binding upon Rolls-Royce plc or any of its subsidiary or
associated companies.
Trusted to deliver excellence
© 2016 Rolls-Royce plc and/or its subsidiaries
The information in this document is the property of Rolls-Royce plc and/or its subsidiaries and may not be copied or communicated to a third party, or
used for any purpose other than that for which it is supplied without the express written consent of Rolls-Royce plc and/or its subsidiaries.
This information is given in good faith based upon the latest information available to Rolls-Royce plc and/or its subsidiaries, no warranty or representation
is given concerning such information, which must not be taken as establishing any contractual or other commitment binding upon Rolls-Royce plc and/or
its subsidiaries.
Why risk management is
important
Section 2
Michael Lawrence
What was the year? 11
Do We Need to Manage Risks?
Click each tab for more information. Click the ‘next’ button to continue.
1971
Rolls-Royce Declared
Bankrupt
2010
Rolls-Royce Qantas A380
Engine Explosion
2013
Formal Bribery Investigation
at Rolls-Royce
News Source: http://www.telegraph.co.uk/
Screen 16
Do We Need to Manage Risks?
1971
Rolls-Royce Declared
Bankrupt
2010
Rolls-Royce Qantas A380
Engine Explosion
2013
Formal Bribery Investigation
at Rolls-Royce
Do We Need to Manage Risks?
1971
Rolls-Royce Declared
Bankrupt
2010
Rolls-Royce Qantas A380
Engine Explosion
2013
Formal Bribery Investigation
at Rolls-Royce
News Source: http://www.bbc.com/news/business-23076586/
Do We Need to Manage Risks?
Click each tab for more information. Click the ‘next’ button to continue.
1971
Rolls-Royce Declared
Bankrupt
2010
Rolls-Royce Qantas A380
Engine Explosion
2013
Formal Bribery Investigation
at Rolls-Royce
News Source: http://www.telegraph.co.uk//
Screen 16
You have now seen various examples on how not managing risks properly resulted in severe losses and even closure of businesses.
We would like to think these things cannot happen at Rolls-Royce. But could they?
Risks and our share price
The impact of risks on our share price
• 17
Risks and our share price
A: £5.6bn
Trusted to deliver excellence
© 2016 Rolls-Royce plc and/or its subsidiaries
The information in this document is the property of Rolls-Royce plc and/or its subsidiaries and may not be copied or communicated to a third party, or
used for any purpose other than that for which it is supplied without the express written consent of Rolls-Royce plc and/or its subsidiaries.
This information is given in good faith based upon the latest information available to Rolls-Royce plc and/or its subsidiaries, no warranty or representation
is given concerning such information, which must not be taken as establishing any contractual or other commitment binding upon Rolls-Royce plc and/or
its subsidiaries.
Corporate governance
Section 3
Michael Lawrence
Risk concentration 21
Closer link between risk and business 22
The Code: Comply or explain….
• 23
Appetite 25
Viability 26
Board oversee effectiveness 27
Trusted to deliver excellence
© 2016 Rolls-Royce plc and/or its subsidiaries
The information in this document is the property of Rolls-Royce plc and/or its subsidiaries and may not be copied or communicated to a third party, or
used for any purpose other than that for which it is supplied without the express written consent of Rolls-Royce plc and/or its subsidiaries.
This information is given in good faith based upon the latest information available to Rolls-Royce plc and/or its subsidiaries, no warranty or representation
is given concerning such information, which must not be taken as establishing any contractual or other commitment binding upon Rolls-Royce plc and/or
its subsidiaries.
Our response
Section 4
Michael Lawrence
29
30
31
32
35
36
Rolls-Royce Proprietary Data
Identify Principal Risks (PR)
Impact of PRs on Long Term Viability
Set Risk Appetite for PRs
Monitor Mitigation & Controls of PRs
Governance of PRs
Reporting
Ass
ess
Eff
ect
ive
ne
ss o
f
Ris
k M
anag
em
en
t Sy
ste
m
Risk Management Process
Effectiveness is measured in two steps: 1) Where is risk management being performed? 2) Is it performed to an acceptable standard? 3) What incidents have happened?
Enterprise Risk Management Framework 37
Process1 Hierarchy Tools
Plan
Identify
Assess
Treat
Review
Close
Risk management culture
Risk organisation3 and training
Supporting technology
Risk appetite2
Templates and guides
Risk policy
Group RMP
Assurance
1) Board 2) Board committees 3) ELT risk committee 4) Business / Functions 5) Sub-Business / Major Projects
Governance & Committees
Effectiveness measures & KRIs
1 Risk process is in Rolls-Royce Management System and is integrated with Strategy, Capex, PM and MI&F 2 Appetite expressed using impact categories and Group escalation criteria 3 ERM central, Champions, Co-ordinators & Facilitators
Principal risks
Key risks
Business/Function risks
Sub-Business / Major Projects
Group risk register
Incident reporting
Deep dives
Trusted to deliver excellence
© 2016 Rolls-Royce plc and/or its subsidiaries
The information in this document is the property of Rolls-Royce plc and/or its subsidiaries and may not be copied or communicated to a third party, or
used for any purpose other than that for which it is supplied without the express written consent of Rolls-Royce plc and/or its subsidiaries.
This information is given in good faith based upon the latest information available to Rolls-Royce plc and/or its subsidiaries, no warranty or representation
is given concerning such information, which must not be taken as establishing any contractual or other commitment binding upon Rolls-Royce plc and/or
its subsidiaries.
Benefits
Section 5
Michael Lawrence
39
45
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