Olam International Singapore – Building a Risk Resilient Enterprise By Foo See Liang & D. G. Allampalli

Abstract

The case delineates how Olam International Limited (Olam) became a global supplier of 14 agro-products and a leading supplier of cashew nuts, cocoa and coffee. With wholly-owned subsidiaries in 36 countries, Olam supplied agro-products from producers' farm gates to factory gates of over 3,300 customers in 40 markets and achieved organic growth by seizing on 'adjacent business opportunities.' Its top line registered a compounded annual growth of more than 28 percent during the period from 2002 to 2005 while turnover rose from S$1.59 billion to S$3.37 billion. Presenting the financial results of 2005, Sunny George Verghese, Group Managing Director and Chief Executive Officer unveiled the growth strategy for 2006 to 2011 which sought to supplement organic growth with acquisitions.

Against the backdrop of agricultural crop seasonality, industry deregulation and cyclicality, and trade liberalisation, Olam weathered fluctuations in demand, supply and price with origination (procurement), integrated supply chain and marketing capabilities, which were supported by a risk management system. As Olam embarked on a growth-by-acquisition model, in addition to its organic growth model, the company had to reassess the need to adjust its present risk management system. The Board's risk committee led by Tse Po Shing was tasked to deliberate on the matter.

Issues: Enterprise risk management, risk audit and documentation, and management of oversight risk.

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