Assignment: Enterprise Risk Management

Assignment #2

Topic:

Enterprise Risk Management

Submitted By:

Nouman Aftab

Roll No:

1088-BC-2012

Class:

B.com (Hons)

Semester:

6th

Enterprise Risk Management

Introduction:

Enterprise risk management is a term that is quickly becoming viewed as the ultimate approach to risk management. There are several types of risk that companies face in their field of business. These risks vary in both the type of risk and the impact the risk could have on the company. As great as these risks vary are the methods in which they are managed. These risks including governance, strategy, and operational are managed in different ways depending on the nature and size of the company as well as the industry it competes. Different types of companies used

There is a need for identifying, assessing, managing and monitoring the organization’s business opportunities and risks. Therefore, all kind of entities need the proper risk management to minimize the risk. Enterprise risk management is the value proposition of risk management. It is about designing and implementing capabilities for managing the risks that matter. The greater the gaps in the current state and the desired future state of the organization’s risk management capabilities, the greater the need for enterprise risk management infrastructure to facilitate the advancement of risk management capabilities over

Reasons for Implementing ERM:

The objective for implementing enterprise risk management is to provide reasonable assurance to an entity management and board that the entity business objectives are achieved.

There are six fundamental reasons for implementing enterprise risk management each serves to help elevate risk management to a strategic level. The six reasons are following:

1) Reduce unacceptable performance variability:

Enterprise risk management assist management with evaluating the likelihood and impact of major events and developing responses to either prevent those events from occurring or manage their impact on the entity if they do occur. Most companies focus on traditional risks that have been known for some time. Few companies have a systematic process for anticipating new and emerging risks. Enterprise risk management assists management with improving the consistency of operating performance by increasing the emphasis on reducing earnings volatility, avoiding earnings related surprises, and managing key performance indicator shortfalls. Enterprise risk management improves the management of increasing risk mitigation costs and the success rate of achieving business