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Risk management protects and adds value to the organization and its stakeholders through supporting the organization’s objectives by:.

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Question added by Ehab Fouad Mohamed Hassan
Date Posted: 2014/03/19
KEITH JOHNSTON
by KEITH JOHNSTON , Various from Senior Internal Auditor to Internal Audit Manager to ERM/GRC Consultant , Both Public & Private Sector

Enterprise Risk Management (ERM), if effectively practised, supports the achievement of organisational/business objectives in three main ways.

1. Improves Organisational/Business Performance by:

  • enhancing readiness for change and/or what otherwise may have been 'the unexpected'
  • minimising the frequency and/or magnitude of losses
  • evidences robust framework for regulatory compliance and Internal Audit '3rd Line of Defence' assurances
  • facilitates proactive identification and communication of inherent risks and therefore allows better appreciation of potential effects on profits and or capital financing
  • helps a more confident and informed approach to investment in new projects and value creation.

2. Helps Establish Competitive Advantage by

  • integrating risk management with strategic planning/management e.g. building distinctive/unique competencies, identify business opportunities that match core risk management competencies, etc
  • the application of ever more increasingly effective risk assessment methodologies
  • protecting corporate reputation and brand image
  • more cost effective application of available resources e.g. removing unnecessary/duplicative controls, more cost effective solutions to common/corporate-wide risks.

3. Optimises the costs of risk management by

  • applying a systematic and consistent methodology across the whole of the organisation (rather than in a 'scatter gun' manner)
  • ensures strategic planning and management processes are aligned with the entity's risk appetite and therefore the potential cost of unmitigated risks are appropriately assessed and understood
  • understanding the cost effectiveness of alternative risk mitigation options e.g. risk transfer via insurance.

irfan kurtulmuslar
by irfan kurtulmuslar , Project Manager , TTNET

Delivering projects;

  • On Time
  • In Budget
  • with the desired Quality

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