CHAPTER 7
RISK CLUSTERS
RISK QUOTE: The most incomprehensible thing about the world is that it is comprehensible.
—ALBERT EINSTEIN, PHYSICIST
RISK QUOTE: My one regret in life is that I am not someone else.
—WOODY ALLEN, MOVIE PRODUCER
A cluster is a number of similar things that occur together. An integral part of our approach to ERM is to encourage risk clustering. We align risks with the business model, bring them together into clusters at each level of a hierarchy, assign risk owners, and limit the number of categories assigned to each owner. We support the effort with technology, which we describe starting in Chapter 8.
Cluster Risk Structure
A number of benefits accrue from a carefully designed risk cluster structure. For one thing, we ...
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