The current study is concerned with understanding the key elements of Enterprise Risk Management (ERM) system. Wates group has been chosen for this purpose as its one of the oldest companies in the construction sector. Wates group is one of the leading construction companies in the UK. The company is 119 years old and was established by Edward Wates and other 3 brothers in the year 1897. The business has seen major expansion during 1920-30s. At present, Wates group has more than 3,500 employees. Wates group is a family owned construction services company that offers construction services to retail, commercial and government clients as well. Some of the major projects completed by Wates group are Citylabs, TSB Bristol, Wates Smartspace and many more. The company is focused on achieving long-term sustainable growth through responsible business behavior. Integrity, intelligence, performance, teamwork and respect for people & communities are the key values of Wates group.

Corporate Governance:

Corporate governance refers to the set of principles, values, mechanism, processes and relations that are used to guide, direct and control an organization. Risk management is a key element of corporate governance as the later is focused on protecting stakeholders from potential risks (Aloini et al. 2012).

Approach and policies towards risk management needs to be developed to ensure an effective and efficient corporate governance to manage potential risks.

Implementation:

The following four persons would be responsible for implementing corporate governance in respect of risk management:

• CFO: The CFO would be responsible to determine approach of the company towards mitigating financial risks as exchange rate risk, currency risk, credit risk & liquidity risks.
• COO: COO would be required to approve the policies and procedures suggested by CFO.
• VP – Operations: VP-Operations would ensure that the said strategies are properly executed across the organization.
• VP – HR: VP-Operations would communicate the strategies & policies to all the concerned managers.

Line Management:

Line management can defined as the administering of activities and tasks in respect of generating output of products and services (Jenatabadi, 2013). In general, a line manager is concerned with generation of revenues or outputs.

Here, risk management responsibilities would be allocated to respective line managers to balance a proper authority and responsibility.

Implementation:

• Linking of risks to different departments like production, sales, marketing, finance and Human Resource (HR)
• Selection of supervisors from concerned departments to lead risk management process
• Allocation of authority and responsibility to each line manager
• Establishing reporting relationship in context of risk management

Portfolio Management:

Portfolio management, in context of risk management, can be defined as the art & science of allocating resources towards each risk considering the potential occurrence and impacts of each risks (Kikwasi, 2013).

In current situation, safety risk, production failure risk, goodwill risk and compliance risk can be considered as the key risks in the risk portfolio.

Implementation:

• Evaluation of existing resources
• Assessment of strengths of potential risks
• Risk prioritization
• Resource allocation for each risk in the portfolio

Risk Transfer:

Risk transfer is the technique to reduce or mitigate a particular risk by transferring the risk to a suitable option (Pinto, 2014).

In present context, workers’ compensation insurance can be bought based on the output generated by the workers to transfer the risk related to the tasks performed by the workers.

Implementation:

• Identification of potential insurance policies
• Selection of the most suitable insurance policies
• Linking insurance policy with workers’ performance
• Conducting periodic review

Risk Analytics:

Risk analytics is mainly concerned with the assessment of potential risks. As mentioned by Shaul and Tauber (2013), risk analytics helps in understanding the potential impacts and probabilities of different types of risks.

In current scenario, assessing the probability of occurrence of accidents to workers due to productions functions and potential impacts would be done.

Implementation:

• Understanding impact of potential risk
• Quantification of risk probability
• Quantification of risk impact
• Determination of risk strength

Data and Technology Resources:

Implementation of ERM in an organization requires data and necessary resources like equipment, manpower, software and others.

In existing case, workers personal information, daily productivity and terms & conditions of the insurance policies would be used.

• Software to record workers’ productivity or output
• Personal data of workers like name, age, gender, nominees and similar others
• Accounting software to calculate amount of insurance premium
• Internet services to communicate with insurance providers

Stakeholder Management:

Stakeholder management refers to the managing of interests of the various stakeholders of an organization in a way that ensures maximum satisfaction level to all the stakeholders (Zhao et al. 2013).

Implementation:

• Investors: Focus would be made on achieving growth in sales and profitability to satisfy investors.
• Employees: Adequate measures would be taken to ensure safety of the workers in the construction industry along with good compensation package.
• Customers: Good quality raw materials like iron bars, cement, bricks and others would be used to ensure the constructed buildings are of good quality to satisfy customers.
• Suppliers: Focus would be made on placing bulk orders to suppliers along with timely payment of invoices.