Maintaining Master Data

Let’s return to our business example and see what the current status is at CRG International.

Pictured above is an overview of the Risk Management team at CRG International. Let’s meet the team and gain an understanding of their roles and responsibilities!

Chief Risk Officer (CRO) & Risk Manager – Nancy Da Silva

Nancy is the CRO and Risk Manager. Her role is crucial for ensuring the effective management of risks within an organization. She is responsible for overseeing the overall risk management strategy and framework and is responsible for implementing and executing risk management processes and activities.

She plays a key role in setting the risk appetite for the organization. She works closely with senior management to identify and assess risks, develop risk mitigation strategies, and establish risk management policies and procedures. She also provides guidance and support to business units and departments in managing risks and ensuring compliance with regulatory requirements.

For example, she may work with the finance department to identify and assess financial risks, develop risk mitigation strategies, and monitor the financial performance of the organization.

Risk Owner – Sam Hall

Sam Hall is the business process owner in Finance and takes responsibility for managing and mitigating financial risks. As a Risk Owner, he is accountable for documenting potential risks, assessing their impact and likelihood, and developing strategies to minimize or eliminate them.

Risk Expert – Brian Law

As a Risk Owner or Risk manager it is crucial to involve experts and specialists from the business in the risk analysis process. This can be achieved through collaborative risk assessment in the SAP Risk Management system. Business stakeholders are invited to contributetheir analysis of the risk.

For example, Brian can choose to respond to a work item in the SAP Risk Management system to provide their analysis of the risk. This collaborative approach ensures that the risk analysis process benefits from the expertise and insights of those directly involved in the business.

Response Owner – Rpandey

As response owner, Rpandey is responsible for implementing the action plan to mitigate the risk in SAP Risk Management. He is assigned as the response owner for a specific response to carry out the necessary actions outlined in the plan.

Central Risk Manager – Xavier Vincent

Xavier Vincent, as the Central risk manager, is responsible forreviewing the top risks at corporate entity.

As CRG International, Inc. decided to implement SAP Risk Management with Nancy Da Silva as Chief Risk Officer & Risk Manager, she starts to set up the master data step by step as shown in the following master data flow chart.

You will now discover the steps in the master data flow chart that were introduced earlier in the previous lesson in more detail.

Nancy will start by setting up the objects in SAP Risk Management in the following order:

She will continue to handle the master data assignments, once all the above objects have been created.

A. Assigning corporate and organization roles

B. Assigning Impact and Driver to Risk

C. Assigning Risk Roles

You will be guided through demonstration exercises on how to set up business objectives, set up an organization hierarchy, set up an activity hierarchy and set up a risk catalog. Let’s start with setting up business objectives.

Business Objective master data is optional Master Data in SAP Risk Management. However, it plays a vital role in enabling organizations to define, manage, and monitor their strategic goals and objectives.

It provides a centralized repository for storing and maintaining business objectives, allowing for proactive risk management and resource allocation. By leveraging this master data, organizations can enhance their ability to achieve their desired outcomes and drive sustainable growth.

CRG International, Inc. decided to structure the master data with the Business Objective of Providing Reliable Business Information, ultimately leading to reliable external disclosures.

Let’s see how Nancy, as the Risk Manager at CRG International Inc, creates the Business Objective "Reliable external disclosures" in the SAP Risk Management system through the following demonstration exercise.

CRG International, Inc. decided to structure the organizational hierarchy based on functional units as Finance -> General Accounting.

Nancy, as Risk Manager, creates the organization unit "General Accounting" in SAP Risk Management.

Key attributes of Organization in SAP Risk Management explained in a nutshell:

• General
• Name of organization and currency
• Valid From and Valid To dates
• Compliance is reported within specified time frames, so it is critical to enter the correct Valid From date
• Objective
• Objectives that correspond to the organization's strategy
• Unit of Measure
• Unit of measure and conversion factors for different impact categories
• Risk Appetite
• Degree of risk-taking, this is to be applied when individual risks are entered into the system
• Risk Threshold
• Is to determine impact levels for quantitative analysis.

Now that you can set up business objectives, it is time to learn how to set up an organization hierarchy. The following exercise will walk you through the process.

The activity hierarchy is used to define different types of business activities: processes, initiatives, projects, and so on. These are shown as the root nodes. For each activity type, you can document a hierarchical activity structure.

CRG International, Inc. decided to structure the Activity hierarchy based on Business Process as Manage financial resources.

Nancy, as Risk Manager, creates the Activity Hierarchy "Manage financial resources" in SAP Risk Management.

Complete the following exercise to discover how Nancy sets up an activity hierarchy.

Risk (Opportunity) categories are attributes that help risk managers organize the array of risks that an organization is likely to encounter.

A sufficient number of descriptive groupings are needed so that every unique risk can be mapped to some representative risk category. Risk categories help the risk team create value from the information being collected so that increasingly "rich" conversations can be held across the organization.

Risk information is a tremendously valuable resource for identifying systemic sources of both organizational risks and problems that create costly rework and unnecessary overhead, and reduce corporate earnings.

The risk and opportunity classification is a hierarchical structure to categorize risks and opportunities.

Complete the following exercise to discover how Nancy sets up a risk catalog for CRG International Inc.

Risk template (Optional) under Risk category is used for reference to create a risk with some pre-populated default data maintained in risk template. For example default data: Risk type, Impact, & Driver.

Nancy decides not to create Risk template master data since CRG International, Inc’s Risk Register contains single risk per risk category. Hence creating Risk template for every single risk isn’t worthwhile. However, it is good to have Risk template created for future purpose.

CRG International, Inc. decided to structure the Risk Category as Operational -> Execution, Delivery & Process Management.

Nancy as Risk Manager, creates the Risk Category "Execution, Delivery & Process Management" in SAP Risk Management.

The leftover Master Data will be described in the upcoming Unit 3 and Unit 4.