In a company as big as Microsoft Corp., it can feel like the weight of the world is riding on your shoulders. So, when Microsoft's treasury risk group undertook a proactive assessment of fortuitous and accidental exposures of its businesses–assessing the risks in dollars and identifying mitigating strategies–it was fitting that they chose to call their undertaking the Atlas Project. "We live and breathe risk," says Rich Sadler, senior risk manager at Microsoft.
Enterprise risk management is a priority at Microsoft. But while the risk management group had performed enterprise-level assessment work important for financing, business unit leaders demanded more of a ground-level view into relevant risk information. The
Atlas Project was designed to validate the programs in place and point out the gaps.
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Microsoft's risk management group met with and interviewed100-plus individuals at its business units, including its law and corporate affairs division. "It started out as, 'Tell us your basic business and tell us what [is] keeping you awake at night,'" says Sadler.
Based on the interviews, some 130 specific loss scenarios were developed. The group drilled down into the data to model each scenario. A stochastic modeling tool that could run Monte Carlo simulations was selected. Within the modeling process, assumptions were made and each was validated. The effort took 14 months to complete. "It takes some time to build out the models," says Brian Warren, the group manager.
It's too soon to assess Atlas' impact. While business leaders knew what was keeping them up at night, now there's a dollar sign in front of their nightmares. Adds Sadler: "To be effective, [treasury has] to understand the risks within the individual businesses. We use that information to [develop] mitigation strategies. It's a two-pronged effort."
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