What is Enterprise Risk Management (ERM)

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ENTERPRISE RISK
MANAGEMENT
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WHAT IS
ENTERPRISE RISK
MANAGEMENT
Enterprise Risk Management (ERM) is a holistic
and structured approach that seamlessly
integrates risk management into an organization's
overall strategic planning and decision-making
processes. It enables organizations to
effectively recognize, assess, priori- tize, and
address risks that can impact their ability to
accomplish their intended goals.
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COMPONENTS OF
ENTERPRISE RISK
MANAGEMENT INTERNAL ENVIRONMENT
Establishes the organizational culture and
governance structure Defines risk tolerance and
commitment to ERM
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OBJECTIVE SETTING
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Defines the organization's strategic and
operational goals Ensures risk management aligns
with and supports these objectives
RISK IDENTIFICATION Involves assessing internal
and external factors influencing risk Identifies
potential risks and opportunities, encompassing
operational, financial, strategic, and compliance
risks
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RISK ASSESSMENT
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Quantifies and qualifies identified risks based
on impact and likelihood Helps prioritize risks
for further attention and mitigation
RISK PRIORITIZATION Ranks risk based on their
significance, allowing focus on high-priority
areas Facilitates resource allocation for risk
management efforts
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RISK MITIGATION
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Develops strategies to mitigate, transfer, or
accept risks Reduce the impact and likelihood of
adverse events
CONTROL ACTIVITIES Implements controls and
policies to manage risks effectively Includes
checks and balances to prevent or detect
undesirable events
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RISK GOVERNANCE
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• Defines the roles and responsibilities of
  individuals and committees in overseeing ERM
• Ensures accountability and compliance with risk
  management policies and procedures

MONITORING AND REPORTING Continuously assesses
risk management processes and outcomes Regularly
reports on risk exposure and mitigation efforts
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INFORMATION COMMUNICATION
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Ensures timely and relevant information flows
throughout the organization Facilitates effective
risk reporting and decision making
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COMPONENTS OF
ENTERPRISE RISK
MANAGEMENT
Helps to identify and address security risks,
reducing the chance of incidents Enhanced
resilience to withstand and recover from
challenges and disruptions Enhanced
decision-making based on risk insights
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Ability to seize opportunities and adapt to
change effectively Enhanced reputation through
proactive risk management Safeguards the
organization's sustainability and success Reduced
financial impact of adverse events Increased
trust from investors, customers,
and regulators Supports regulatory compliance and
strengthens governance
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