Ayesha Srivastava ERM - Graded project

Business Administration (Institute of Management Technology, Ghaziabad)

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 COURSE: ENTERPRISE RISK MANAGEMENT
PROJECT: STORA ENSO

Question a) Find the impact rating for each of the risks in the 'Calculate Impact' sheet of
1. the template provided.
b) Calculate the average likelihood of the risks in the 'Calculate Likelihood'
sheet of the template provided.
c) Using the values of Likelihood and Impact in the 'Likelihood - impact table'
sheet of the template provided, plot the risks on the heat map, which is also
provided in the 'Likelihood - impact table' sheet.

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Question 2. Calculation of risk scores

Question 3. Prioritization of the risks and justification why the risk is important

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PRIORITY RISK JUSTIFICATION
LEVEL

P1 Declining The pandemic triggered a fall in paper demand by

Sales roughly 18% for Stora Enso due to which the
company was forced to shut down two paper mills
putting 1100 jobs at risk. It has a high financial
impact of around 4.5-4.7m USD and resultant
lack of motivation for the sales team.

Likelihood Impact Velocity Risk Score

4 5 Medium 20

P2 Use of old Use of old technology saws leads to 15% raw

technology material wastage. This in turn increases the cost
of raw material to produce the same output that
can be achieved with latest technology saws.
The estimated financial impact due to the use of
old technology is around 3.1-3.4m USD. It could
also have an impact on the employee branding.

Likelihood Impact Velocity Risk Score

4 4 Low 16

P3 New New regulations on working shifts could lead to

regulations shutting down of night shift working in factories.
This could result in lay-offs of night shift workers
and is expected to have a financial implication of
circa 2.4-2.6m USD.

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 Likelihood Impact Velocity Risk Score

4 3 High 12

P4 Data hacking Data hacking could lead to a breach and loss of

data security. It is estimated that data hacking
could have a financial impact of around 1.7-1.9m
USD.

Likelihood Impact Velocity Risk Score

2 2 High 4

P5 Consumer End customers preferring biodegradable plastic

preferring packaging may impact the current product line.
biodegradable This could have an impact of the company’s
plastic finances by around 0.6-0.8m USD. This could
packaging also result is no growth in the company’s brand
value.

Likelihood Impact Velocity Risk Score

3 1 Low 3

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Question 4. One aggravating factors for each risk -the forest produce industry creating an
impact on their revenue generation

RISKS AGGRAVATING FACTOR

Data hacking could lead to loss of data security.
If competitor companies gain access to this lost
Risk data, Stora Enso could be at risk of losing their
Data hacking
1
intellectual properties of their forest produce
industry leading to financial losses.
Use of old technology could result in about 15%
wastage of raw materials. If the cost of raw
Risk Use of old materials increased, say, due to geo-political
2 technology
tensions, then the resultant increase in cost
could be aggravated.
Stora Enso's forest division adds value to their
renewable services by focusing on sustainable
forest management, competitive wood supply,
and innovation. The world's major economies
Risk are focused on renewable energy and
Declining sales
3
developing low carbon/carbon neutral solutions
to reach their NetZero targets. This could result
is increased competition in this space leading to
a further decline in sales.
Forest reserves are normally under the control
of local governments. Stora Enso's operation in
the forest division could be hindered by local
regulations passed by the governments. Suppose
the local governments mandate that the noise
Risk
New regulations
4 levels produced by the company's
manufacturing units need to be brought down to
a level below that they are currently operating,
it could trigger an overhauling of their
machinery leading to additional financial losses.

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 Consumers preferring biodegradable plastic

Consumer packaging can impact the current product line.

Risk preferring The competitor companies launching new
5 biodegradable
plastic packaging biodegradable products could impact Stora
Enso's brand value and lead to loss of revenue.

Question 5. Four mitigation strategies to reduce the risk posed by the aggravating factors

RISKS MITIGATING STRATEGIES

Implementing robust IT security and enabling
Risk
Data hacking employees to work only through the
1
company's virtual private network (VPN).
Investing in new technology saws and
Risk Use of old
distributing the investment costs over several
2 technology
projects.

Getting into framework agreements with their

Risk
Declining sales clients to establish a strong pipeline and drive
3
innovation in the renewable resources space.

Obtain necessary clearances and adhere to

Risk
New regulations strict compliances as mandated by the local
4
authorities.

Consumer preferring
Risk Investing in market research, R&D and
biodegradable
5 review of their current product line.
plastic packaging

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