Why Enterprise Risk Management (ERM)?
by Lorie E. Graham, CPCU, ARe, ALCM, ARM, ARC, AIAF, AIM, ARP Senior Vice President and Chief Risk Officer, AmericanAg
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Enterprise risk management is an integrated forward-looking, process-oriented approach to managing key risks and opportunities in your organization. It increases awareness of risks across the entire organization and provides a framework, which helps your organization manage risks holistically. ERM can provide a competitive advantage for your organization by creating operational efficiency, enhancing the achievement of objectives, and improving communication to the leadership team and the board of directors.
The ultimate goal of ERM is to enable the business. Risk itself is the effect of uncertainty on objectives. Strategic plans and objectives, are goals that are necessary for your organization to succeed. Ideally, ERM is aligned with strategy setting. Linking risk to strategy enhances the achievement of objectives. Risks are managed within your organization’s appetite through monitoring of key risk indicators and deployment of action plans when risk tolerances are exceeded. This enhances your organization’s agility and performance.
There has been a growing number and complexity of risks in recent years. New risks are emerging, and existing risks are evolving. Risk managers must modernize their ERM program to keep pace with the changes. What action has your organization taken?