Running Head: ENTERPRISE RISK MANAGEMENT
Enterprise Risk Management
ENTERPRISE RISK MANAGEMENT
Enterprise risk management refers to the process of planning, organizing and managing the
events of an organization or an institution, (Beasley, 2016). It is relevant to ensure that the impacts
of the risks on the capital of a firm are minimized. It provides a framework for risk management.
It involves identifying the potential risks, coming up with the appropriate strategies of eliminating
the risks and ensuring that the process is implemented effectively. Identifying and responding to
the risks before they happen is important since it protects and creates value for the stakeholders
and the society. It prevents an institution from incurring losses which would be difficult to recover
from. The methods and the processes that are involved in enterprise risk management are
significant to an organization considering that they contribute to the achievement of an
organization’s objectives and goals.
Enterprise risk management (ERM) is an umbrella that covers the operational, strategic,
financial risks, regulatory risks, and environmental risks in an organization, (Toma, et al., 2014).
Through the ERM, an organization is in a position to identify the opportunities in which it can take
advantage of. The existence of opportunities gives an institution a chance to utilize its resources
appropriately for the benefit of society, the company and all its stakeholders. In businesses and
institutions, risks are highly involved. There is no way a business can prosper without taking
certain risks. However, one should analyse and research to find out whether the risk is worth
taking. A robust ERM contributes to the making of this decision. It directs the organization to
make ultimate decisions which are beneficial.
An effective Enterprise Risk Management leads to having a successful business. In a case
where an organization fails to point out the risks, then it will not be prepared when struck or when