Professor Dr Zaidi Bin Isa
Chief Risk Officer, Universiti Kebangsaan Malaysia

Title: Dynamic Evaluation of Enterprise Risk Management(ERM) at Eletrobrás Furnas in Brazil

Abstract:

This white paper is intended to describe the methodology applied in automating Enterprise Risk Management (ERM) in one of the largest power utility company in Brazil i.e., Eletrobrás Furnas. Institutional rules or guideline that addresses business risk with only qualitative view do not indicate method to evaluate this exposure quantitatively. In the traditional qualitative analysis, the measure of riskiness of a company is a snapshot at a point in time. Mitigation measures are evaluated later often from audits to verify the degree of compliance on previous snapshots. The effort to implement these mitigation measures is typically not dynamically evaluated. The proposed method intends not only to documents the state of vulnerability of a company to the events that may lead to risk losses, whether economic or noneconomic, but also to quantify and measure the uncertainties of the risks and their mitigation cost. All of this is done dynamically, whereby the company may periodically make adjustments to achieve its targeted goals for reducing exposure, and pushes the envelope from qualitative assessments to quantitative risk analysis. In addition, probability assessment via fuzzy logic approach is proposed as an alternative approach to calculate the average mean of the qualitative probability obtained in the traditional analysis