What is the process for implementing the Enterprise Risk Management technique into an organization?

Expert Solution

Enterprise risk management :

Enterprise risk management in business includes the methods and processes used by organizations to manage risks and seize opportunities related to the achievement of their objectives. ERM provides a framework for risk management, which typically involves identifying particular events or circumstances relevant to the organization's objectives ,assessing them in terms of likelihood and magnitude of impact, determining a response strategy, and monitoring progress. By identifying and proactively addressing risks and opportunities, business enterprises protect and create value for their stakeholders, including owners, employees, customers, regulators, and society overall.

ERM can also be described as a risk-based approach to managing an enterprise, integrating concepts of internal control, the Sarbanes–Oxley Act, and strategic planning

ERM is evolving to address the needs of various stakeholders, who want to understand the broad spectrum of risks facing complex organizations to ensure they are appropriately managed.

Various consulting firms offer suggestions for how to implement an ERM program

Identifying executive sponsors for ERM.
Establishing a common risk language or glossary.
Describing the entity's risk appetite (i.e., risks it will and will not take)
Identifying and describing the risks in a "risk inventory".
Implementing a risk-ranking methodology to prioritize risks within and across functions.
Establishing a risk committee and or Chief Risk Officer (CRO) to coordinate certain activities of the risk functions.
Establishing ownership for particular risks and responses.
Demonstrating the cost-benefit of the risk management effort.
Developing action plans to ensure the risks are appropriately managed.
Developing consolidated reporting for various stakeholders.
Monitoring the results of actions taken to mitigate risk.
Ensuring efficient risk coverage by internal auditors, consulting teams, and other evaluating entities.
Developing a technical ERM framework that enables secure participation by 3rd parties and remote employees
above process is used to implement the enterprise risk management technique

ekkarill92 answered 1 year ago

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