Principles of Risk Management and Insurance, 13th Edition

Enterprise Risk Management

“Traditional” risk management, as discussed in the previous chapter, was limited in scope to pure loss exposures, including property, liability, and personnel-related risks. An interesting trend emerged in the 1990s, as many businesses began to expand the scope of their risk management programs to include speculative financial risks. Some large organizations have gone a step further, expanding their risk management programs to consider all the risks faced by the organization and the strategic implications of the risks. Risk management programs that holistically consider all risks faced by an organization are called enterprise risk management (ERM) programs. Before discussing ERM, financial risk management, an important ...