HOW TO CREAT A RISK INTELLIGENT ENTERPRISE
Presenter: Karen Ning
Case Study: Starbucks’ Penetration Into Asia Market
AGENDA
1. A Quick Recap of The Risk Intelligence Enterprise 2. Case Study: Starbucks Entering Asia Market 3. Four Risk Areas: Starbucks Case 4. Conclusion: 3 Pillars to Create/Sustain A Intelligence Enterprise
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¢ Protect existing assets & create future value. Understands that risk management must be built into core ways of protecting existing assets and of creating future value
¢ Consider interactions among multiple risks. Considers interactions among multiple risks instead of focusing on one single risk, and considers the impact that could result from multiple threats
¢ Treat turbulence as inevitable. Assumes turbulence is inevitable and emphasizes prevention and preparedness to improve both resilience and agility
¢ Create common language. Create common language of terms and metrics for value and risk, and a culture in which people account for value and risk in every key decision and activity
A RECAP OF THE RISK INTELLIGENCE ENTERPRISE Organizational Characteristics
Organization
A RECAP OF THE RISK INTELLIGENCE ENTERPRISE Four Risk Areas
• Risks related to legal and regulatory compliance
• Risks in financial reporting, market, liquidity, and credit risks
• Major risks that affect the organization’s ability to execute
• Risks both to and of the organization’s objectives
Strategic Risks
Operational Risks
Compliance Risks
Financial Risks
AGENDA
1. A Quick Recap of The Risk Intelligence Enterprise 2. Case Study: Starbucks Entering Asia Market 3. Four Risk Areas: Starbucks Case 4. Conclusion: 3 Pillars to Create/Sustain A Intelligence Enterprise
¢ How does Starbucks achieve a similar profitability in Asia compared to the US market?
¢ What does the coffee giant has to do to prepare for an unknown environment?
Case Study: Starbucks Entering Asia Market Starbucks and China Market Background
“We’re talking to a lot of companies that are saying, ‘I’m ready. How do I come?’ ” (Max Magni, McKinsey & Company China)
Risks Advantages
Chinese consumers’ saving habits
Chinese government backing spending spree
Consumption in smaller cities lagging far behind larger ones
China’s nouveau riche and emerging middle class
Complex national distribution Salary raise to encourage consumption
Marketing/Advertising largely local
Government’s plan to create long term economy growth
Case Study: Starbucks Entering Asia Market Starbucks and China Market Background Continued
Case Study: Starbucks Entering Asia Market Apply the Framework
Risk Governance
Direct & Oversee
• Howard Shultz, CEO plus 11 others
Board of Directors
Case Study: Starbucks Entering Asia Market Apply the Framework
Risk Ownership
• Identify risks related to consumer behaviors – question for example
Risk Process/Risk Classes
Business Units
Can Starbucks coffee survive in traditional tea-drinking countries?
Case Study: Starbucks Entering Asia Market Apply the Framework
• Develop strategies according to the identified risks • Menu modification • Flavor Profiling
Risk Infrastructure
Common Risk Infrastructure
Executive Management
Menu Modification: • Local tea options available • Alishan Oolong, Ruby Black
tea, Bi Luo Chun, Oriental Beauty Oolong
Flavor Profiling: • Red Bean Green Tea Cream
AGENDA
1. A Quick Recap of The Risk Intelligence Enterprise 2. Case Study: Starbucks Entering Asia Market 3. Four Risk Areas: Starbucks Case 4. Conclusion: 3 Pillars to Create/Sustain A Intelligence Enterprise
FOUR RISK AREAS: STARBUCKS CASE
¢ Strategic Risk – Serve more food ¢ Operational Risk – Slow down services ¢ Financial Risk – Publically traded company ¢ Compliance Risk – 2008 Chinese Milk Scandal
Strategic Risk
Operational Risk
Financial Risk
Compliance Risk
FOUR RISK AREAS: STARBUCKS CASE
Starbucks, Tapei Medical University Hospital
Starbucks, Central, Hong Kong
AGENDA
1. A Quick Recap of The Risk Intelligence Enterprise 2. Case Study: Starbucks Entering Asia Market 3. Four Risk Areas: Starbucks Case 4. Conclusion:3 Pillars to Create/Sustain A Risk Intelligence Enterprise
CONCLUSION: 3 PILLARS TO CREATE/SUSTAIN A INTELLIGENCE ENTERPRISE
¢ Pillar 1: Process ¢ Pillar 2: People ¢ Pillar 3: Information Technology