Enterprise Risk Management at Honeywell Intl
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Case Details:
Case Code : ERMT-020
Case Length : 13 Pages
Period : 2003
Pub Date : 2003
Teaching Note :Not Available
Organization : Honeywell International
Industry : Aerospace
Countries : Global
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Excerpts
The Integrated Risk Management Program
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Honeywell began its Integrated Risk Management program in 1997. Under this
program Honeywell tried to group many risks and manage them together, instead of
dealing with each risk separately.
Honeywell developed an innovative insurance contract, in partnership with its
main insurer, American International Group (AIG). Under a single policy,
Honeywell grouped together not only traditionally insurable risks - product
liability, property, employee crime and so on - but also protection against
changes in various foreign exchange rates, global political risk, director and
officer liability, U.S. auto liability, U.S worker compensation, etc...
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Marketing Risks
Many of Honeywell's products and services competed with those of a large number
of other companies, some of which had substantial financial resources and
significant technological capabilities. In addition, some of Honeywell's
products competed with the captive component divisions of original equipment
manufacturers...
Operations Risks
In general, the principal raw materials used in Honeywell's operations were
readily available. Honeywell was also not dependent on any one supplier for a
major portion of its raw materials. But some important components and product
equipment items were procured or subcontracted on a sole-source basis with a
number of domestic and foreign companies...
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Environmental Risks
Honeywell was subject to various federal, state and local government
requirements relating to the protection of employee health, safety and the
environment.
The company believed that, its policies, practices and procedures were designed
to prevent unreasonable risk of environmental damage.
Honeywell had taken various steps to ensure that its handling, manufacture, use
and disposal of hazardous or toxic substances were in accordance with
environmental laws and regulations... |
Political Risks
The U.S. government was a major customer of Honeywell. Sales to the U.S.
Government (principally by Honeywell's Aerospace segment), acting through its
various departments and agencies and through prime contractors, amounted to
$2,277, $2,491 and $2,219 million in 2002, 2001 and 2000, respectively...
Excerpts Contd...>>
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