The J & J. Enterprise Risk Management Framework Essay

The J & J. Enterprise Risk Management Framework Essay

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Johnson & Johnson was founded in 1886 by the Johnson brothers. It is an American based pharmaceutical, medical and consumer product manufacturer. Since the 1960’s the company has been based out of New Brunswick, New Jersey. In the United States they are ranked third in being one of the most environmentally conscious companies. The company is run on the principals of, according to Johnson & Johnson (1997) as “Broadly Based in Human Health Care, Managed for the Long Term, Decentralized Approach and Our People and Values” (The J&J Strategic Framework). Enterprise Risk Management is a strategic plan which includes the whole company. It is designed to identify risk or events which could affect the enterprise, which allows them to assess and fix the problem. This paper will go further in depth to explain to you the specific information included in the J & J Enterprise Risk Management Framework. The purpose of the framework according to Johnson & Johnson (1997), “categorizes risk, identifies and manages potential events that may affect the enterprise, accountability for risk management and governance and oversight of risk management activities” (Introduction).

Risk assessment is a process which involves risk analysis and risk evaluation. Risk analysis is when a company identifies a threat, determines the cause and then estimates the impact. Risk evaluation is when risk levels are compared to already established risk criteria. When a company like J&J performs their assessments they are quickly able to identify vulnerability as well as understanding impacts on critical functions. Johnson & Johnson divide their risks and threats into four distinct categories.
The first and most important is compliance risk. Compliance involves: legal, fi...


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...able to access internal and external risk. Internal risk arises from human factors. An example would be a strike, started by the people and with the intentions of it benefitting the people. External risk, has more to do with events effected by economics. Second, a proper risk response must be determined. Risk response is crucial in reducing risk and threats throughout a company. Proper planning and taking a course of action must happen. Third, policies and procedures need to be established along with controls, systems and accountability to support response. Fourth, risks must be clearly communicated through all the teams and mitigation plans put in place. A mitigation plan includes developing options and actions to reduce threat. Evaluating the risk process is also included in the plan. And last but not least, the effects of the mitigation plan need to be monitored.

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