Enterprise Risk Management
In everything that we do there is always a risk. The results
may be positive or negative, but whatever it would be man
should be ready to face such outcomes. In the business
industry, there is a need for owners of the enterprise to
brace themselves with risks and opportunities towards
achieving their objectives of earning profit.
Enterprise Risk Management (ERM) refers to the
methods and processes used by organizations as a tool to
manage risks or take control of opportunities related
towards achievement of their objectives. ERM tends to
assist management into identifying the areas of concerns
where risk or opportunities is likely to occur, assessing
the impact that it will yield, determining the response
strategy to undertake, monitoring of the performance
and looking for measures to conform with regulations.
In enterprise risk management, the organization may
select actions on handling risk in various ways, to wit:
1. Avoidance. Management tries to put an end to an
activity as it indicates rise to risk.
2. Reduction. Management takes action to an activity to
decrease or reduce the likelihood or result related to
3.Share or insure. Management transfers or shares a
portion of the risk, as a means of reducing it.
4. Accept. Management has not taken action, due to
a cost/benefit decision.
Management proactively taking into a look at enterprise
risk management shows how committed the organization
is to its stakeholders, including owners, employees,
customers, regulators, and society as well in ensuring
that risks and opportunities are taken care of and
controlled before a risks occur.