Strategic Risk Management
at GM: Changing the Risk Paradigm
Angela Hoon ,
Executive Director
Strategic Risk
Management
General Motors
Company
1
AG
EN
DA
• WHY IS RISK MANAGEMENT KEY
TO GM’S BEHAVIORS AND
CULTURE?
• WHAT ENABLED AN INNOVATIVE
APPROACH?
• HOW IS GM SHIFTING THE RISK
PARADIGM?
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WHY IS RISK MANAGEMENT KEY TO GM’S BEHAVIORS AND CULTURE?
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RISK IS INEVITABLE, MANAGING IT IS NOT
Facebook COO, Sheryl Sandberg at 2018 MIT Commencement held June 8th, 2018
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A WAKE-UP CALL ON ETHICS, SAFETY & RISK
• In 2014, GM initiated a massive recall to address an ignition switch issue that was creating a safety hazard
• The result of the ignition switch failure and subsequent investigation included:
• Harm to customers
• Significant employee discipline
• Legal actions
• Significant expenses from Recalls, Rework, Penalties, and Damages
• Loss of company reputation 5
CHANGES GM MADE – TOGETHER WE DRIVE THE RIGHT BEHAVIORS AND CULTURE
Ethics & Compliance
• Revised Code of Conduct – Winning with Integrity
• New Compliance Officer• Channels for Escalation –
Speak up for Safety
Strategic Risk
• Board Risk Committee (established Oct. 2014)
• New Enterprise Risk Leader in May 2015
• Focus on building a culture of risk by integrating risk into the business
Vehicle Safety
• New Vehicle Safety Leader in 2014
• New Safety Organization with focus on data analytics
• Cross-functional safety principles
• Monitoring and assurance on controls
GM Values & Behaviors
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GM’S VISION FOR RISK MANAGEMENT
Focus on strategic and
cross-functional
analysis of risk and see
around corners
Embed a risk-aware culture
across the enterprise,
including open, transparent dialog of risk
Ensure consideration
of risk and opportunities in decision-
making
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WHAT ENABLED AN INNOVATIVE APPROACH?
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Business Plans& Initiatives
STRATEGIC RISK MANAGEMENT AT GM
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Disruptions& Trends
Business Model& Structure
External Players& Events
SRM PROGRAM FOCUS
1.
2.
3.
ENTERPRISE RISK &
REPORTING
DECISION SUPPORT &
RISK ANALYSIS
INTEGRATION OF RISK
MANAGEMENT
FOCUS ON ENTERPRISE RISK AND REPORTING
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A view of risk across the organization
RISK GOVERNANCE FACILITATED THROUGH TOP-DOWN AND BOTTOM-UP COMMUNICATION STRUCTURE
Risk Committee of the Board
Senior Leadership Team
Risk Advisory Council
Risk Officers
Management
Communicate risk information real time
Provide oversight over GM’s portfolio of risks
Champion mitigation and monitoring efforts
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InterconnectedRisk
Blind spot
What are theHidden Risks & Opportunities?
What are the Risk Clusters to prioritize?
What are the Likely Player Strategies?
What should Our Strategy be and
is it robust?
What Could Go Wrong with our
strategy?
Social MediaWhat do the
Monitor Signals indicate?
RISK ANALYSIS AND DECISION SUPPORT
Wargaming
Game Theory
Pre-Mortem
Strategy TableWhat are our Guiding Principles to achieve a vision?
Scenario Planning
How might Trends & Risks play out?
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CHANGE TO A NETWORK VS INDIVIDUAL VIEW OF RISKP
roba
bili
ty
Impact
Risk
#1Risk
#4
Risk
#6
Risk
#9
Risk
#2
Risk
#8
Risk
#5
Risk
#7
Risk
#3
Traditional Risk Model
Risks Get attention!
Risks Get acknowledged
Risks Get a nod
But is that right?
What if these are not isolated risks?
Network Risk Model
Risk
#7
Risk
#2
Risk
#8
Risk
#4
Risk
#1
Risk
#6
Risk
#9
Risk
#5
Risk
#3CausalRisks
EffectRisks
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APPROACH RISK FROM A DIFFERENT ANGLE
DECISION SUPPORT TECHNIQUES
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Who is involved?
What can they do?
What do they want?
How will they act?
What should GM do?
Preferences ProposalAnalysisPlayers Options
• Game Theory and Wargaming are GM’s most commonly used decision support tools
• Expertise in applying these techniques brings the Risk Management team to the table for a variety of strategic decisions, including: • M&A discussions• Labor/ Supplier/ Partner negotiations • Regulatory change
THE DIFFERENCE BETWEEN GAME THEORY AND WAR GAMING
Blindspot
Workshop
Social Media
Analysis
Other player(s) decisions are important but
independent of GM
Other player(s) decisions important and affected by GM
actions
Game Theory War Gaming
HOW IS GM SHIFTING THE RISK PARADIGM?
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GM CONFIDENTIALStrategic Risk Management
ENGAGE CROSS FUNCTIONAL TEAMS DIFFERENTLY
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GM CONFIDENTIALStrategic Risk Management
ADAPT RISK TO THE BUSINESS NOT BUSINESS TO RISK
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Eliminate Risk Jargon with the
Business
Find Management Forums where Risk discussion can be Included Naturally
Integrate withthe Business vs. Being an Add-on
Link Risk Analysis to Business
Challenges, Strategy and Decisions that
are Top Priority
These efforts help cascade risk throughout GM, spreading a risk culture across the organization.
Business Acumen
Risk management is:
• a thought process or business technique
• that creates value for the organization
• through enablingleadership and cross-functional teams
• to analyze complex business challenges
• and make risk informed business decisions.
Critical Thinking and Decision
Support
Ability to Partner and Influence
Risk Knowledge
HOW GM IS SHIFTING THE PARADIGM ON RISK MANAGEMENT
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