Hypothetical Case Study A:

State of play at Orion Group without an Enterprise Risk Management solution

Orion Group, a family owned company headquartered in Dubai, has operations across several locations in the Middle East including Jordan, Egypt, Bahrain and with newly set up operations in India. Orion Group is a fast growing construction company with 77% exposure to the residential sector. The Orion Group Net Profit After Tax for 2007 is equivalent to the Group Turnover for 2006. In common with other companies in this sector, Orion Group has a gearing of 75%.

The Orion Group intends to diversify its revenue with a view to reduction in exposure to the residential sector. The Board also intends to expand regionally specially in the booming Indian commercial and residential markets. The Group has also entered into several join ventures with foreign partners and intends to list the Orion Group on the London Stock Exchange in 2008.

The success story has brought with it certain concerns for the management as the management processes within the Group have not kept pace with the business growth. As a consequence, the Board worry about the Corporate Governance framework (framework which determines how the Orion Group is controlled). There have been several instances of fraud and non compliance with operational and regulatory requirements. This has resulted in some damage to the Orion Group reputation.

The Orion Board have the following concerns:

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• The business is being run without knowledge of certain key risks
• Senior Management spend time 'worrying' about impact of risks should the risks occur
• The business spends time containing the impact of major risks e.g. unexpected costs, price wars, new regulations etc.
• The business may suffer life threatening damage should certain major risks crystallize
• In a crisis, it is apparent that the business struggles to define clear accountability for action. A thinks its B's responsibility and B thinks its C's responsibility!
• Compliance with risk management requirements of regulators will NOT successfully pass the 'show me' test
• Revenue/profits will not be protected from unforeseen events and positive opportunities will be missed

The Board then requests Risk Quotient to implement an Enterprise Risk Management solution to address the above concerns. We conduct a detailed study to check whether we can add value to the Orion Group and only then accept the assignment.

Please see Case Study B to illustrate how we then implement an Enterprise Risk Management solution at Orion Group.