Understanding Enterprise Risk Management
Does anyone else remember back when life was easier, when the innocence of youth made things simpler… and “enterprise risk” just conjured up images of the Starship Enterprise being subject to various outer space mutinies or coming under attack from Romulan forces in an effort to defend Klingon outposts? Times certainly have changed!
These days, to stay on top of your personal and corporate finances and ensure your own and your company’s future wealth and security, it’s necessary to know about monetary concepts and terms such as enterprise risk and compliance solutions. To be financially savvy, you need to know the rules of the game. Invest wisely and invest for future prosperity – yet be aware of the requirements and regulations that are set in place today to capitalise on tomorrow’s best returns, regardless of whether you are an individual investor or the head of an enterprise.
In a nutshell, Enterprise Risk Management (ERM) is an approach to managing an enterprise based on risk factors. It entails the methods and processes of risk budgeting and management used by organisations. Enterprise risk takes into account certain events and circumstances that might impact upon the achievement of the organisation’s objectives, and then works out an appropriate response strategy in case of the realisation of the particular event or circumstance. The strategy entails a process of monitoring and ultimately adds value for the stakeholders, who can include a whole range of the business and broader community, including owners, employees, shareholders who have participated in hedge funds, customers and clients, regulators, and society in general.
When it comes to enterprise risk, it’s essential to know that there are a few other terms that are synonymous are readily interchangeable. When it comes down to the nitty-gritty, you’re dealing with enterprise risk when you’re talking about strategic risk management, holistic risk management and business risk management.