Risk Management: Foundations for a Changing Financial World

CHAPTER 50

THE PLAN SPONSOR’S PERSPECTIVE ON RISK MANAGEMENT PROGRAMS^ax

Desmond Mac Intyre

A sound risk management program must be grounded in the organization’s philosophy, objectives, and mission. General Motors Investment Management Corporation has integrated a variety of key criteria—from audit/review to output—into comprehensive building blocks for a total risk management system.

Looking back and trying to pick the point at which an organization first began its risk management activities is difficult, especially when people believe strongly that risk management always existed. In fact, much of the early work that an organization does in developing a risk management program simply centers on documenting what has actually happened to that point. Eventually, most organizations move to a more structured environment in which explicit objectives are set and practices are continually documented—in other words, to a formalized point at which it is no longer sufficient to say that the organization has always operated in a particular way and everyone knows what that way is.

This presentation discusses the experience of General Motors Investment Management Corporation (GMIMCo) in building a broadly constructed risk management program to cover the more than $110 billion under its management; included are program objectives and scope, critical building blocks, key criteria, and potential benefits.

BACKGROUND

The first step toward setting up a formal risk management structure was taken ...