ENTERPRISE RISK MANAGEMENT

RC: Could you briefly explain the importance of enterprise risk management (ERM) and the benefits it brings to an organisation?

Webster: All organisations exist to create value for stakeholders. That value is greatest when considerations of product and service benefits, costs and risk are optimally balanced in a way that maximises that value. Maximising value at the enterprise level requires balancing these considerations as part of a portfolio of products and services delivered by the enterprise. Enterprise Risk Management is the management of key risks across the enterprise in a manner that maximises the opportunity for achieving enterprise goals and objectives. This is accomplished by applying the principles of completeness, consistency, integration and strategic alignment in order to develop an enterprise-level portfolio view of risk that is not achievable when managed only within functional and programmatic silos.

Hurrell: ERM was originally established to help companies achieve compliance – for example, Turnbull or Sarbanes-Oxley. But many successful companies are now going further and have placed the ERM function at the heart of strategy to underpin corporate resilience and even to support competitive differentiation in their markets.

Oct-Dec 2013 Issue

Association for Federal Enterprise Risk Management

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