GRC: Enterprise Risk Management PI

Governance: The Enterprise Risk Manager’s Line Manager

Any risk that is imaginable in the business world, strategic, financial, cyber security threats and many more including an ever changing  and an equally challenging regulatory environment; not forgetting the domestic, regional and global competition etc. prowl (for the lack of a better term) today’s unpredictable and extremely competitive commerce.

In times like this, it’s important to take a holistic view of business practices, processes and workplace ethics amongst everything else to ensure that adequate control mechanisms are in place to keep the business entity afloat while focusing not only on the risks that can threaten value, but also the risks that an enterprise can take to create value.

What Is Risk Management?

Risk management ensures that an organization identifies and understands the risks to which it is exposed. Risk management also assures that the organization has done enough in creating and implementing an effective risk management plan to prevent losses or at the least reduce the impact(s) if a loss occurs.

A risk management plan includes strategies and techniques for recognizing and confronting these threats. Good risk management doesn’t have to be expensive or time consuming; it may be as uncomplicated as answering these three questions:

•    What can go wrong? 
•  What will we do to prevent the occurring and in response to the loss? 
•  If something happens, how do we pay for it?

What is ERM

Enterprise risk management (ERM) predominantly is a dynamic proactive approach in business to manage risks and seize opportunities related to the achievement of their objectives, this definitely includes constantly monitoring all business functions, the process and how they are carried out. ERM provides a framework for risk management, which typically involves identifying particular events or circumstances relevant to the organization's objectives (risks and opportunities), assessing them in terms of likelihood and magnitude of impact, determining a response strategy, and monitoring progress of that one individual event, circumstance and activity or on an overall operations perspective. By identifying and proactively addressing risks and opportunities, business enterprises protect and create value for their stakeholders, including owners, employees, customers, regulators, and society overall. (ERM)

ERM can also be described as a risk-based approach to managing an enterprise, integrating concepts of internal control, the Sarbanes–Oxley Act, and strategic planning.

Enterprise risk management calls for organizations to identify all the risks they face, to decide which risks managing actively or addressing on a priority basis. By priority it does not just mean giving preference for its ability to reoccur frequently but also its impact even if it was a onetime thing only, and then to make that plan of action available to all.

In putting together ERM initiatives, companies are supposed to focus not only on the downside of risk but the upside as well. The conventional approach was to focus on the downside - the losses that might be caused by a disruption in the normal course of business, e.g. a break in the supply chain or cyber attack that impairs a company's records. Likewise, working on the upside of this is when the companies are supposed to consider viable opportunities and future rewards that might arise out of efficient management of risk. Some of these involve matters of strategy like where to locate a plant or office abroad based on a risk analysis that would look at the political environment in a country.

Benefits of ERM

Enterprise Risk Management, pretty much like a snake wrapping itself around its prey wraps itself around the organizations nutty gritty but in a positive way to ensure all medium to large scale issues are addressed while the smaller ones are tackled to ensure there are no losses due to negligence of the people made responsible for the same.

In a nutshell, they can be bulleted into what appears below:

Increased consistency and communication of risks within the organization

1. Enhanced reporting and analysis of corporate risks (risk data) 
2. Improved focus, attention and perspective to risk data 
3. More efficient and effective activities related to regulatory, compliance and audit matters 
4. More cost-effective management and monitoring of risks