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Enterprise Risk Management Enterprise Risk Management (ERM) is the process where the planning and controlling is lead by the activities of the organization to maximize the productivity and minimize the risk at management level and earnings.

Importance of ERM It is important to have ERM as it determines the success and life of the business. Failing to identify the risks may result in failure of the organization mission and vision.

Components of Risk Management

Risk Data and Infrastructure: Risk management and risk profile of the organization and management can be analyzed by risk data and infrastructure. It refers to the information collected and integrated. This is most challenging aspect of ERM.

Environment control: For management of risks, one of the most important tools in the management is controlled environment. Management relies on internal controls and manage risks to acceptable levels.

Evaluation and Measurement: It is necessary to manage the portfolio for risks. Measurement and evaluation help the management to answer the process management questions and internal controlled risks.

Planning and Testing: Addressing the knowable risks and unknowable risks and planning the scenarios for the stress testing is must in capital planning perspective.

Reference: Fraser, J., Simkins, B., & Narvaez, K. (2014). Implementing enterprise risk management: Case studies and best practices. John Wiley & Sons