Enterprise Risk Management: The Implications Of Enterprise Risk Management

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Definition Enterprise risk management is a continuous process in which a business plans, organizes, leads and controls it activities in order to minimize the occurrences and impacts of risks (Rouse, 2010) Enterprise risk management is an ongoing process of risk management which should be implemented strategically at every level of a company. It ensures that all risks are identified and managed according to the company’s risk appetite (Committee of Sponsoring Organizations of the Treadway Commission, 2015). Enterprise risk management is therefore an integrated framework, combing the risk management of a range of business activities (Liebenburg & Hoyt, The Determinants of Enterprise Risk Management: Evidence From The Appointment of Chief Risk Officers, 2003, Volume 6, Issue 1). A result of enterprise risk management is an aligned risk appetite and strategy so that related objectives and systems can be developed within a company. Therefore, it establishes the manner in which a company will react, avoid, minimise, share and accept risk. The analysis of all risks allows for the improved allocation of capital. Through this and the identification of multiple …show more content…

However, today enterprise risk management addresses the combined impact of positive and negative risks as an interrelated risk portfolio. (The Risk Management Society, 2015) Therefore, companies now also consider competitive opportunities and strategic advantages that might arise. A focus on preventative measures is now also enforced. Combining the positive and negative risks means that companies must now analyse and manage all risks such as the movements in currencies and interest rates as well as the public’s perception of the company which will effectively build the company’s value (Quinn,

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