Enterprise risk management (ERM) is a systematic approach to managing risks across an entire organization. It involves identifying, assessing, mitigating, monitoring, and reporting on risks that could impact the organization’s objectives, stakeholders, and operations. ERM provides a holistic view of all the risks that an organization faces and allows it to prioritize and allocate resources to manage those risks effectively.
The goal of ERM is to help organizations anticipate and manage future financial, operational, and regulatory risks, as well as mitigate lawsuits and penalties. By using a risk-based approach, companies can identify and prioritize the risks that pose the greatest threats to their business, and then take action to address them.
ERM involves a range of activities, such as risk assessments, risk mitigation strategies, monitoring and reporting on risks, and ongoing risk management. It is a continuous process that requires engagement from stakeholders at all levels of the organization, including executives, managers, employees, and external partners.
Overall, enterprise risk management helps companies protect their reputation, employees, investors, and community by enabling them to allocate resources effectively and make informed decisions that take into account the potential impact of risks on their business.