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You are a Consultant tasked with creating an ERM for an organization.  You can choose an organization you are familiar with, your own organization or make one up.  

In your 3-5 paged paper include the following requirements:

  • Discuss the organization and reason for selecting it.
  • Explain 2-3 potential risks in the organization that led to an ERM being implemented.
  • Describe the proposed ERM solution components. Include timelines, resources, visualizations, etc.
  • Discuss the benefits and challenges with the proposed ERM.

In your paper include:

  • Title Page
  • Content
  • 1-3 References [separate page]

ITS 835 enterprise risk management Chapter 19

ERM – Kilgore Custom Milling

University of Cumberlands

1

introduction

Background

The management team

The company

The new contract

The financial risk management meeting

University of Cumberlands

2

background

Kilgore Custom Milling

Small private manufacturer

Power window assemblies

Based in southern Ontario, Canada

Pursued contracts to supply plants in the U.S.

Successful in negotiating a contract with Japanese manufacturer

Previous international contracts resulted in loss

Due to currency volatility

University of Cumberlands

3

The management team

Owner and CEO

Steve MacLinden

Left day-to-day operations for the rest of the team

Manufacturing and Plant operations

Rory Sullivan

Sales and Client relationships

Casey Dobblestyn

Treasurer and CFO

Cathy Williams

University of Cumberlands

4

The company

Privately owned

100% by Steve MacLinden

Planning to retire in 5 – 10 years

Main focus is cash flow management

Concerns with currency related cash flow issues

Additional concern about inflation differences

Between U.S. and Canada

University of Cumberlands

5

The new contract

Dramatically increase sales

Over 100% for 5 years

Complex and exacting specifications

All proceeds in U.S. dollars

Kilgore must manage financial risk

Contract could be extended for 3 years

But at the same price, benefitting the buyer

University of Cumberlands

6

The financial risk management meeting

U.S. and Canadian dollars near par

Caused concern over U.S. competition

Multiple options to deal with currency risk

Long term swap contracts

Short term forward contract

Currency options

Management team lack understanding of the options

More open questions than answers

Lots more to do …

University of Cumberlands

7