Description
Whether an organization's risk management function is focused on traditional insurable risks or broader enterprise-wide risk management, an audit of risk management should be among the first priorities for senior leadership. If a separate risk management department does not exist, it is even more important as fewer resources are dedicated to the process of identifying and evaluating risks and ensuring appropriate risk responses are intact. With this in mind, write a 3- to 4-page paper, citing at least three sources, on how an organization can benefit from an objective evaluation of the risk management function.
Explanation & Answer
Attached.
Running head: RISK MANAGEMENT
1
Evaluating Auditing of Risk Management Function
Name
Institution affiliation
RISK MANAGEMENT
2
Evaluation of Risk Management Function
Introduction
Enterprise Risk Management comprises of a business-based approach or plan used to
identify and prepare for any events or problems that can halt the functionality of an organization.
In the contemporary business environment, the use of traditional risk management has almost
become obsolete (Lee & Giang, 2018). The reason for this is that traditional risk management
program only focuses on the bottom line, and by centering on the losses and damages caused by
unmitigated risks. On the other hand, ERM program focuses on increasing the value of an
organization because it is more effective in the management of uncertain issues while also
encouraging the organization's readiness and multi-disciplinary accountability, geared towards
promoting a positive culture (Wittmer, 2014).
Description of Enterprise Risk Management program and traditional risk program
More importantly, Enterprise Risk Management (ERM) is broad-based and it looks into
all aspects of an organization in the auditing of risk management. Once a risk has been identified,
ERM ensures that the board has been informed to make a final decision in a bid to mitigate the
potential risk. On the other hand, traditional risks focus on the insurable aspects of t...