What is enterprise risk management and why is it important

Enterprise risk management (ERM) is a firm-wide strategy to identify and prepare for hazards with a company's finances, operations, and objectives. ERM allows managers to shape the firm's overall risk position by mandating certain business segments engage with or disengage from particular activities.

Why is enterprise risk management important?

Why is ERM Important? The importance of ERM is broad and far-reaching. A comprehensive ERM framework consolidates and improves risk reporting so you can identify key risks that may affect your organization, quantify and manage them better, and implement the proper controls to eliminate or reduce the threat.

What is enterprise risk management in simple terms?

Enterprise risk management (ERM) is the process of identifying and addressing methodically the potential events that represent risks to the achievement of strategic objectives, or to opportunities to gain competitive advantage.

What are the benefits of ERM and why it is important?

Some of the most important metrics used in valuing an ERM program include the total cost of risk, annual loss expectancy, risk coverage ratio and reputation quotient.