Enterprise Risk Management: A Guide for Government Professionals

Chapter OneWhy Enterprise Risk Management?

The U.S. government has a long history of adapting and adopting successful and prudent business practices from the private sector. In the arena of financial management, this is perhaps best illustrated by the adoption of the Chief Financial Officers Act of 1990, with its requirement that federal agencies pass financial audits.¹ The adoption of enterprise risk management (ERM) is no exception. Although risk management has long been a priority for many organizations, the private sector financial collapse of 2008–2009 has put a spotlight on enterprise risk management as a critical component of an organization’s overall health and long-term sustainability.²

There is no one set definition of ERM that all ...