Tracy, Grace and several other managers asked if I could provide them with more technical information about enterprise risk management (ERM). Tracy said, “I know that you simplified much of the details, and I appreciate that. Can you provide information for us to obtain a deeper understanding of this emerging best practice?”
For Tracy, Grace and anyone who would like a little more information about ERM, enjoy this appendix, starting at its overall purpose and inception. Based upon a career spent analysing risk and leadership’s impacts, I offer the following view, especially for auditors and CFOs.
ERM enables an organisation’s leaders to deal with any uncertainty that harms a firm’s value, which are aspects of the entity that shareholders and other stakeholders are interested in protecting.
ERM represents a fundamental shift in the way businesses must approach everyday risk. As our economy becomes more service and technology driven and globally oriented, businesses cannot afford to let new, unforeseen areas of risk remain unidentified or ignored. We now have more guidance on the implementation of a consistent ERM structure from the Commission of Sponsoring Organizations of the Treadway Commission’s (COSO’s) ERM framework. The framework defines and describes ERM and provides a standard against which businesses can assess their ERM programme ...