ERM_Week7_Journal
ITS 835 enterprise risk management Chapter 18
ERM – BlUE WOOD CHOCOLATES
University of Cumberlands
1
introduction
Background
Market overview
Blue Wood financial performance
Conclusion
University of Cumberlands
2
background
U.S. Manufacturer of chocolate products
Privately owned (family)
New CFO
Outsider
Brought in to stabilize financial performance
Blue Wood risk management practice in doubt
Banks wondering if RM gaps are causing unstable finances
Considering taking action
Internal politics and conflict
University of Cumberlands
3
Market overview
Growing market
Major competitive factors
Large producers
Brand recognition / reputation
Cocoa markets overview
Sugar markets overview
Milk markets overview
University of Cumberlands
4
Blue wood financial performance
Profitability measures worse that competitors
Lots of internal finger pointing
Deteriorated cash position
Currently borrowing against revolving line
Retained earnings falling
Substantial investments
In case cash flow couldn’t cover dividend payments
Potential $10 million lawsuit
Risky entrance into currency hedges and futures
University of Cumberlands
5
conclusion
Business underperforming
Immediate action is necessary to respond to banks
CFO requires
Overall view of corporate objectives
Major risks facing the company
Must have support from the top
After initial pass
Implement ERM
University of Cumberlands
6
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