ERM Fast Facts
Enterprise Risk Management Defined
Enterprise risk management (ERM) is the process of coordinated risk management that places a greater emphasis on cooperation among departments to manage the organization's full range of risks as a whole. ERM offers a framework for effectively managing uncertainty, responding to risk, and harnessing opportunities as they arise.
Importance of ERM
There are several checkpoints that drive the need for enterprise risk management, which include:
- Greater transparency
- Financial disclosures with more strict reporting and control requirements
- Security and technology issues
- Business continuity and disaster preparedness in a post-9/11 world
- Focus of rating agencies
- Regulatory compliance
- Globalization in a continuously competitive environment
Benefits of ERM Framework
No matter how well planned and executed, risk management procedures cannot always guarantee results. Nevertheless, using the enterprise risk management framework can increase an organization's and its shareholders' confidence that they will achieve their objectives. ERM offers a number of benefits:
- Align risk appetite and corporate strategy
- Links growth, risk and returns
- Improves risk responses
- Reduces operational surprises and losses
- Recognizes and acts upon opportunities
- Deploys resources effectively
