The Importance Of Enterprise Risk Management
According to the Merriam-Webster Dictionary, Enterprise is a project or activity that involves many people and is often difficult; a business organization; the ability/desire to do dangerous/difficult things or to solve problems in new ways. All these are however geared towards making profit.
Risk according to Merriam-Webster dictionary can be defined as the possibility that something bad or unpleasant (such as injury or loss) will happen; the chance of loss or the degree of the probability of such loss.
Management according to the Business Dictionary is the organization and coordination of the activities of a business in order to achieve defined objectives. It consists of the interlocking functions of creating corporate policy and organizing,
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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. By identifying and proactively addressing risks and opportunities, business enterprises protect and create value for their stakeholders and society as a whole. (ERM Committee, …show more content…
6.0 CONCLUSION
Enterprise risk management is an on-going process that is applied in setting strategy across the enterprise. It is designed to identify potential events that, if they occur, will affect the entity and to manage risks within its risk appetite. ERM is not a question of whether or not it is compulsory for firms/ organisations. It is a matter of necessity as all firms/organisations are exposed to one risk or the other in the course of operations.
Most firms/organisations start up with the Business continuity in mind. Business continuity involves activities which are intended to ensure that an organization’s critical business functions will either continue to operate despite serious incidents/disasters that might have interrupted them, or will be recovered to an operational state within a short period.
The concept of Business continuity have made it a necessity for all firms/organisations to undertake the Enterprise risk management process so as to remain relevant in their field of
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