The Benefits of Enterprise Risk Management
The benefits of enterprise risk management provide company leaders and other stakeholders with a structured intellectual framework to help plan for and cope with the vicissitudes of a constantly shifting business environment.
The benefits of Enterprise Risk Management (ERM), a plan-based business strategy, enable business executives and senior staff members to achieve key organizational goals:
- Identify potential events which could affect the well being of the business enterprise.
- Successfully manage risks and opportunities associated with these events.
- Provide reasonable assurance, based on risk mitigation steps taken that significant objectives outlined for the enterprise will be achieved.
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ERM can also be described as the process of planning, organizing, leading and controlling an organization’s activities in order to minimize the effects of risk on capital and earnings. As such, the benefits of enterprise risk management expand the risk management process to not only include risks associated with accidental losses, but also the full set of financial, strategic, operational and other risks to the enterprise’s well being.
Following are key initiatives generally associated with the ERM process:
- Ensure prompt resolution of internally identified risks to compliance with laws and regulations.
- Identify/remediate compliance issues and promote reporting and monitoring across compliance functions.
- Establish a rigorous, optimized enterprise-wide approach to auditing.
- Protect the physical safety of all stakeholders and assets.
- Choose and support strategies to ensure effective use of enterprise resources.
- Facilitate improved decision-making, planning and prioritization through a deep and structured understanding of opportunities and threats to the enterprise.
- Support value creation by enabling management to recognize and deal effectively with future events that threaten to create uncertainty and pose significant risk. Respond to these events in a timely, efficient and effective manner.
Enterprises which successfully integrate the benefits of enterprise risk management into their strategic planning process are more likely to accomplish their stated goals and objectives. This is particularly true when the enterprise faces inevitable obstacles, no matter where the obstacles originated.
Our team has the proven enterprise risk management experience to understand your specific challenges and provide objective advice you can count on.
Note: This content is provided as general background information and should not be taken as legal advice or financial advice for your particular situation. Make sure to get individual advice on your case from a KMRD risk professional before taking any action.