What is ERM?

2. What is ERM? ERM is a process, effected by an entity’s board of directors, management, and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, manage risks to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives. - COSO Enterprise Risk Management Integrated Framework (2004)

3. ERM Objective Portfolio of Risks Stakeholder Risk Appetite

4. Research suggests that…. • ERM is still in initial stages of development and implementation • Regulated companies (financial, insurance, utilities) are the leaders in ERM sophistication • Non-regulated enterprises are also practicing elements of ERM • 87% of survey respondents have an ERM framework in place, with a large majority building upon COSO’s ERM framework. Source: Enterprise Risk Management: Inside and Out, The Conference Board of Canada, 2005

5. The North Carolina State University’s College of Management launched the Enterprise Risk Management Initiative (the ERM Initiative) to provide leadership in the management of entity-wide risks for boards of directors, senior executives, and other stakeholders seeking to preserve and enhance entity value. Vision

6. The While most businesses have some focus on risk management, many observers note that the process is often ad hoc in nature, with inconsistent methodologies used to track and manage various risk exposures. In these environments, typically little, if any, analysis of the interrelationships of risk silos occurs. Leadership in ERM processes is needed. Business Need

7. The College of Management faculty are actively involved in national and international ERM thought-leadership activities, including representation on the COSO Board and COSO ERM Advisory Group (www.coso.org) and participation in several ERM working group summits and ERM research activities. College Faculty Leadership

8. Research finds that the stage of ERM adoption is positively related to: • Presence of a chief risk officer • Board of director independence • CEO and CFO support for ERM • Size of the entity • Nature of industry – banking, insurance, education Source: “Enterprise Risk Management: An Empirical Analysis of Factors Associated with the Extent of Implementation,” Mark Beasley, Rich Clune and Dana HermansonJournal of Accounting and Public Policy, November/December 2005

9. The College of Management (COM) hosts regular ERM Roundtables for members of the business community to learn about emerging enterprise risk management techniques and to exchange practical implementation ideas. Areas of Focus ERM Roundtables

10. 25 Roundtable events since 2004 • Over 2,000 attendees Areas of Focus ERM Roundtables

11. Areas of Focus Past ERM Roundtable Presenters

12. Mark your calendar for our Fall Roundtable Series: Dates: Friday, September 28, 2007 – Speaker TBA Friday, November 2, 2007 – MasterCard International Friday, December 7, 2007 – Social Security Administration

13. Research finds that the stock market reaction to announcements of Chief Risk Officers is: • Positively associated with entity size and earnings volatility • Negatively associated with leverage and amount of cash on balance sheet Source: “Information Conveyed in Hiring Announcements of Executives Overseeing Enterprise-Wide Risk Management Processes,” Mark Beasley, Don Pagach and Richard Warr, NC State Working Paper

14. While there is an extensive amount of publicly available information on specific risk management topics, there is opportunity for the College to host a web-based information portal that synthesizes leading edge information resources about enterprise risk management. Areas of Focus Internet Resources www.erm.ncsu.edu

15. By providing a focus on enterprise risk management issues, the ERM Initiative provides opportunities for COM faculty to integrate ERM across COM undergraduate and graduate curricula in an effort to train future corporate leaders in ERM leadership. Our goal is to expand our ERM course offerings for our graduate business students. Areas of Focus Graduate & Undergraduate Curriculum

16. College faculty are actively involved in national and international ERM thought leadership, including activities affecting public policy related to risk management, internal controls, and public disclosures. Areas of Focus Responses to Issues Affecting Public Policy

17. The ERM Initiative encourages and sponsors academic research on ERM issues. Because ERM has an entity-wide focus, faculty across all disciplines within the College contribute to ERM relevant research. Several COM faculty have recently published articles about ERM. Areas of Focus Research on Enterprise Risk Management

18. The College works with community and business enterprises to provide hands-on guidance about effective enterprise risk management implementation and participates in making ERM related presentations at regional, national, and international professional conferences. Areas of Focus Hands-on Consulting & Speaking Opportunities