ERM is a holistic approach to identifying, assessing and managing risks within a company. ERM encompasses all types of risks, including strategic, financial, operational and compliance risks that may affect business activities.
The goal of ERM is to minimise risks and take advantage of opportunities to create long-term value for the company. It involves implementing processes to ensure that risks are identified, assessed and managed at an early stage. These processes may also include monitoring and reporting to ensure that the risk management strategy is appropriate and working.
ERM is considered by many companies as a best practice to improve risk management and to ensure that risks are managed effectively and efficiently. ERM can also help meet regulatory requirements and increase the confidence of stakeholders such as investors and customers.
An effective ERM strategy requires the collaboration of all departments within an organisation to ensure consistent and comprehensive risk assessment. It may also require regular review and adjustment of the ERM strategy to ensure that it adequately addresses changing conditions and risks.
Overall, ERM is an important component of successful corporate management. It enables companies to minimise risks and seize opportunities to create long-term value while meeting regulatory requirements and building stakeholder confidence.
