Arita, to provide scalability to the consequence scale, consider using a percent of some business-related measure, such as: gross revenue, net revenue, operating income, EBITDA, or similar. These measures should be available for a discrete business unit within a larger company.
For example, a minor financial impact could be < 0.5-percent of gross revenue, or 2.5-percent of net income.
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John Brown
Risk Manager, Supply Chain Development
The Coca-Cola Company
Atlanta GA
United States
jbrown3@na.ko.com-------------------------------------------
Original Message:
Sent: 05-13-2009 11:20
From: Arita McPherson
Subject: Scalable risk ranking tools
We are in the processes of revising our risk ranking impact and likelihood matrices. The current versions are useful at the corporate level, but not useful for individual business units.
The factors that the impact matrix takes into consideration are: financial, reputation, customer and employee. One of the reasons the matrix is not useful at the business unit level is the magnitude of financial loss. A "minor" financial impact at the corporate level is a reduction in net income of less than $2 million.
We are considering building scalability into the revised matrices so that they can be used by all levels of the organization. Does anyone have experience to share on how they handled the scalability issues and what process was used to develop the matricies?
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Arita McPherson
ERM Strategist
Farm Credit Canada
Regina Saskatchewan
Canada
arita.mcphreson@fcc-fac.ca
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