What distinguishes enterprise risk management from more traditional approaches to risk management?

What distinguishes enterprise risk management from more traditional approaches to risk management?

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Expert Solution

i)Traditional risk management is done in segment or department wise, whereas enterprise risk management is a holistic approach.

ii)In case of traditional risk management, every department or business unit in a firm deals with the risk associated with the department or business unit, however solution to risk comes from the board of directors in case of enterprise risk management.

iii)Traditional risk management focuses on preventing risk inside a business unit, whereas enterprise risk management focuses on reducing the risk and increasing sustainability across the whole organization. So, we can say that traditional risk management follows a tactical approach, whereas enterprise risk management follows strategic approach.

iv)In traditional risk management, the solution to a risk and steps to mitigate it comes from the expertise of each business unit, whereas in case of traditional risk management strategy is set across the whole organization to mitigate a risk.

jeff jeffy answered 9 months ago

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