Project Return

Challenges In Enterprise Risk Management

July 26th , 2012

Enterprise risk management (ERM) as a term has developed over recent years to mean differing things to different people.

Enterprise Risk Management (ERM) is as an enterprise-wide, integrated (holistic) approach to corporate management. The aim is to increase corporate value by systematic risks responding and securing the company’s goals against disruptive events.

The essence of ERM is built around the pragmatic use of risk management as an effective management tool and to be a significant driver of value. In today’s economic climate, the demand for a more comprehensive approach to risk management to ensure that risks and opportunities are systematically identified and the risk responses are developed has never been more critical.

Defining risk management’s role within the business (and vice versa) is also an extremely common topic of conversation. As rules and standards keep changing, this will remain a top challenge. Other frequent issues include event/loss management, building a risk taxonomy, and evaluating vendor/partner risk.

Challenges In Enterprise Risk Management

Assessing ERM’s value

Privilege (of access to risk information)

Defining risk

(Selecting a) risk assessment method

Qualitative versus quantitative (assessment metrics)

Time horizon (for risk assessments)

Multiple possible scenarios

ERM ownership

Risk reporting

Simulations and stress tests