This week, we'll continue with the case study on foreign exchange risk from Larry's Luxury Food and Wine. We completed two big section, the risk management process last week. But we still need to cover rating risks and monitoring reviewing the process. The risk assessment led Larry to conclude that the risks of cashflow catastrophe were too great. There are many possible risk treatments will consider this week. Typically, these would require the approval of the Executive Committee and possibly even the board, which goes to show how important it is for senior leaders to actively oversee the risk management process. In fact, good risk managers are creative at thinking up a range of alternatives and examining the pros and cons of each. One of your tasks this week, will be to come up with a suitable risk treatment. I bet you didn't realize that risk management was such a creative process. In the second part of this week's offering, we will be shifting gears somewhat. We're returning to the theme of governance, but this time with a risk focus. One of the most significant governance trends of this century, has been the increasing focus on risk management. Arguably, this trend started with the finder of Enron. Enron's directors didn't understand that the company had evolved from being a supplier of energy with trader in complex derivatives and their auditor, Arthur Andersen, also filed their duty. This scandal was a catalyst for risk governance reforms and the concept of enterprise risk management, with the bold playing a critical role. Interesting risk governance was heightened by the global financial crisis of 2008, which many people view at it core as a failure of governance. Too often, directors were ignorant of the risk taken by the organization and oversight was lacking. But this risk governance revolution is not just about financial institutions. Consider the more recent case of Toyota. For many years, Toyota was admired around the world for innovation and quality. The firm had enjoyed great success using tight Japan centered management, oversight and control. A new risky strategy of expanding supply chains and manufacturing around the world, led to massive product recalls due to faulty brakes, steering, and electronics. The cost to Toyota, both direct and reputational was huge. Directors, like everyone else, struggled with risk management. They're certainly not immune to behavioral biases and most don't see themselves as risk experts. After all, risk management is still an emerging discipline, so a few directors will be able to draw on their executive experience in this regard. The challenge of risk governance, is to encourage everyone from directors to the most humble employee to play their part in the risk management process. This includes people who have no natural interest in managing risk and might regard it as something just for the risk specialists. Many regard risk and compliance as an impediment to doing business rather than an enabler. Getting people engaged with it, is one of the greatest influencing challenges of all the many organizations. This requires culture change at a fundamental value.