Enterprise Risk Management Essay

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Activity 1 1.1. Purpose ERM aims to assess the risks and address the risks related to the primary goals and objectives of the business and ensure decisive and clear responses to those risks. The main purpose of an ERM approach to risk management is to effectively manage the risks which could affect the achievement of the organisations goals and objectives thereby allowing the organisation to ensure that value is maximised for the stakeholders. 1.2. Key objectives of an ERM approach • The implementation of ERM provides the board and management with reasonable assurance that the organisation’s objectives are achieved. ERM allows the board and management to better understand the risks and uncertainties facing the business and take decisive actions to mitigate those risks or take advantage of certain opportunities which may arise. Hence an ERM approach will also assist the board in making well informed strategic decisions and aligns the strategy with the corporate culture. • ERM enhances risk responses in the ever changing business environment. • ERM frameworks provide a defined structure as well as clear guidance for managing risks in a systematic and organised manner. • It enables the organisation to identify and prioritise significant risks and areas of weakness in the controls assigned to those risks. It reduces the impact of inconsistencies in performance and improves in the efficiencies of the operations of the business. • Establishes oversight, control and discipline for the effective management of risk within the organisation. • ERM frameworks seek to embed risk management as an integral part of all business activities and decision making processes at all levels of the organisation. • It provides staff with well defined roles and responsibilities utilising established, best practice processes and the required tools and technologies to manage

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