Enterprise risk management (ERM) is the process of planning, organizing, leading, and controlling the activities of an organization in order to minimize the effects of risk on an organization’s capital and earnings. Enterprise risk management expands the process to include not just risks associated with accidental losses, but also financial, strategic, operational, and other risks.
The uncertain economic times of the past few years have had a major effect on how companies operate these days. Companies that used to operate smoothly with the help of forecasts and projections now refrain from making business judgements that are set in stone. Now, companies have a renewed focus: to manage risk.
Risk is the main cause of uncertainty in any organization. Thus, companies increasingly focus more on identifying risks and managing them before they even affect the business. The ability to manage risk will help companies act more confidently on future business decisions. Their knowledge of the risks they are facing will give them various options on how to deal with potential problems.
Organizations face internal and external actors and influences that make it uncertain whether, when, and the extent to which they will achieve or exceed their objectives. The effect this uncertainty has on the organization’s objectives is risk so risk management is important in an organization because without it, a firm cannot possibly define its objectives for the future. If a company defines objectives without taking the risks into consideration, chances are that they will lose direction once any of these risks hit home.
On this note, I invite you to come and attend a 2 days enterprise risk management training at the institute on the 19th and 20th April 2018. Come and learn how to develop and implement an effective enterprise risk management framework and the key skillsets required for an effective ERM function, the systems software to be considered and how data should be collected and managed.