Almost 25 Years Since Enron: What Have We Learned?

On December 2nd, 2001, Enron, a world leader in the energy industry, declared Chapter 11 bankruptcy. This event sparked a series of investigations into Enron’s accounting practices and financial strategies. Nearly 25 years after Enron’s collapse, we have seen substantial changes in accounting standards, corporate governance, and securities regulations. My project researches these changes and how they have affected the accounting profession. Namely, I explore the SOX Act, additions to the Accounting Standards Codification, the impact on Certified Public Accountant licensure, and required undergraduate accounting coursework. Further, my project examines the events leading to Enron’s downfall, focusing on how its executives exploited accounting loopholes, off-balance-sheet entities, and corporate governance failures to mask financial instability

Monitoring Risk Response Actions for Effective Project Risk Management

The article of record as published may be found at http://dx.doi.org/10.1002/sys.20154Complex projects typically involve high-consequence, project-specific risks that require detailed analysis and for which risk response actions (RRAs) need to be developed and implemented. The risk picture is dynamic. The sources and consequences of risks evolve and change over the project lifecycle; thus, it is necessary to constantly monitor risk. RRAs that do not keep pace with the changing project situation are a major cause of risk management failures. This paper extends traditional cost risk analysis from a purely macroscopic perspective by evaluating and tracking project-specific risks and RRAs at the microscopic level. The key elements of the method are (i) develop risk scenarios, (ii) model them using generalized decision trees, and (iii) quantify the risks using Monte Carlo simulation. For each risk the probability and cost values are conditional on the specific RRA and the preceding outcomes. The use of fractional factorial design provides a subset of all possible RRA combinations for efficiently determining the preferred total project RRA solution. Risk curves are generated to provide the necessary information to analyze, track, and manage the performance of the selected RRAs over time. Project managers and team leaders can use this information to dynamically manage the RRAs to keep pace with the changing project situation, thereby increasing the probability of project success in a cost-effective manner. The approach is detailed using a realistic but simplified case of a project examined first with one and then expanded to three technical risks.The research presented in this paper was supported in part by the Acquisition Chair of the Graduate School of Business & Public Policy at the Naval Postgraduate School