What is ERM?
Is ERM yet another compliance exercise or can it drive meaningful value for your organization?
Enterprise Risk Management (ERM) is “the culture, capabilities, and practices, integrated with strategy-setting and its performance, that organizations rely on to manage risk in creating, preserving, and realizing value.”1 Industry and regulatory bodies now expect and require it, but beyond meeting those expectations, every organization needs it to survive in this fast paced, ever-changing world.
ERM provides an overall framework for risk management – for identifying particular events or circumstances relevant to the organization, assessing their likelihood and magnitude of impact, determining a response strategy, and monitoring risk status over time. By elevating risk insight to organizational decision makers in a timely and transparent fashion, ERM presents an opportunity for organizations to develop capabilities that enhance decision-making and in turn, create and preserve value.
ERM can be described as a risk-based approach to managing an organization. At an enterprise level, ERM programs generally apply qualitative and quantitative measurements through a risk assessment model. This allows organizations to rate and rank risks through consistently applied probability, immediacy, and impact measures, while considering severity and reputation impacts, generating a priority scale across the organization. In addition, ERM allows an organization to prioritize and allocate resources against those risks that support the organization’s pursuit of its strategic objectives. ERM uncovers risks in order to build organizational resiliency and sustainability.
Learn more about the benefits of ERM and how it can drive meaningful value for your organization.