What-is-Enterprise-Risk-Management

1. What is Enterprise Risk Management? Enterprise risk management is the process of planning, organizing, directing, and controlling the activities of an organization to decrease the detrimental effects of risk on its capital and earnings. Enterprise risk management includes financial risks, operational risks, strategic risks, and risks associated with accidental losses. External elements are adding power to the heightened interest in ERM. The risk management policies and procedures of companies are closely monitored by investors as well as government and industry regulatory bodies. Why is ERM Important? The importance of ERM can be quite extensive. A complete ERM framework combines and improves risk reporting so you can distinguish key risks that may influence your organization, quantify and manage them better, and implement precise controls to dismiss or reduce the threat. ERM can also enhance human productivity, improve customer relationships, and develop your compliance posture. In various industries, ERM allows companies to recognize the relationship between risk and value creation. An ERM program can grow your supply chain, so you can expertly plan your inventory and forecast customer demand, reduce operational costs, and increase revenues. If your organization is in science or research, ERM can support you to track risk during the entire lifecycle of a new product or project, preserving your work at all stages. What Are The Components of Enterprise Risk Management? Business and IT Objectives A company's planned strategic initiative must be included in all risk analysis and decision- making. A migration into cloud services, for example, definitively changes many controls and risk paradigms. Risk Appetite To manage business continuity, an enterprise must assess its tolerance in pursuit of strategic goals. Culture and Governance Some types of companies are normally risk-averse, while others promote risk cultures to seek strategic initiatives.

2. Additionally, internal governance models and collaborative team structures will vary widely across enterprises, transforming the way decisions are made and controls executed. Compliance and Control Requirements Internal standards and external regulatory and compliance requirements must be factored into risk and control decisions. Measurement and Reporting All ERM programs should provide up-to-date and consistent output to a cross-section of stakeholders, ranging from corporate executives to operations professionals. The metrics used to gauge progress as well as the reporting mechanisms and styles are essential considerations. What Are the Benefits of Enterprise Risk Management? By building a more risk-focused culture, integrating risk evaluation into business and IT practices is a great way to develop risk management across the board. Enterprises can execute more standardized risk reporting that assists with long-term metrics and measurement. Organizations can increase focus and improve their perspective on risk in a mixture of categories. Greater focus on risk correlated with business objectives may drive towards more effective use of resources -- for instance, application of restricted endpoint security licenses to the most exposed and critical systems. Highly regulated companies can develop the coordination of regulatory and compliance concerns throughout a diverse set of business objectives. Clients choose Compliance 360’s Enterprise Risk Management Service because they want to build a more sophisticated and responsive internal framework for risk identification and risk management. Contact us today for more information on how we can provide your business with our ERM services.