1. What are the prospects and consequences for Blue Wood if it carries on the way it has been?
2. Are corporate objectives and strategy important and if so, why?
3. Discuss whyandhoweitheranFRM(financialriskmanagement)oranERMframework might benefit a company like Blue Wood.
4. What are the main challenges in developing and implementing a risk management framework for Blue Wood? How does the ownership structure affect these challenges?
5. If the company is to develop a risk management framework, who should lead the process? Should a Chief Risk Officer (CRO) be appointed? If so, to whom should he/she report and have access to? How could smaller companies without the resources for a dedicated CRO deal with ERM? What is the role for the board in such a process?
6. Should Blue Wood hedge its exposures to commodities and foreign currencies? If so, how should it go about hedging; for example, in terms of:
managing, monitoring, and evaluating the hedging program
time horizon of the hedges
budget for option premiums
accounting and reporting the hedging program
7. Are there other areas where Blue Wood should consider a risk management program?