Enterprise Risk Management Frameworks
By applying Enterprise Risk Management in conjunction with other operational elements in the current business environment, companies can also accomplish many of their governance-related tasks.
Specifically, Enterprise Risk Management can help organizations:
- Identify strategic risk opportunities that, if undertaken, can facilitate achieving organizational goals.
- Provide senior management with the most up-to-date information regarding risk that may be used in the decision-making process.
- Establish co-dependency between the Enterprise Risk Management initiative and considerations for capital market reporting disclosures and other laws and regulations.
- Align annual performance goals with risk identification and management.
- Encourage and reward upstream reporting of business-risk opportunities and challenges.
There are various Enterprise Risk Management frameworks that a company could potentially follow, all of which should define the essential components, suggest a common language and provide clear guidance for enterprise risk management. In addition, each framework that is implemented should also describe an approach for identifying, analyzing, responding to, and monitoring risks and opportunities facing the enterprise.
Among the more widely known frameworks and/or standard, and the related Enterprise Risk Management definitions that they promulgate are:
- COSO Enterprise Risk Management Framework
- ISO 31000 Risk Management Standard