ERM (Enterprise risk management) or business risk management are the tools or methods that some organizations have to try to manage the risks in which they are involved, while trying to achieve the goals that were raised.
These tools try to foresee what is going to happen, to anticipate events. Some of these events are decisive for the achievement of the organization's objectives. It will be necessary to evaluate, in terms of probability, the impact it will provide, as well as to provide an efficient response to such risk.
All this will be aimed at the search and protection of the value that will be delivered to its stakeholders (company interest groups) that will determine, in part, whether or not its objectives are met.
The ERM may have computer systems (softwares) or specific plans to be carried out efficiently and correctly.
Characteristics of enterprise risk management
Among the features that characterize ERM we can find:
- It is a constant and continuous feedback process that affects the entire organization
- It is usually designed according to special events that incur real risk to the company
- It is administered and carried out by specialized personnel in the company, with stability and long duration in the company (who knows how they will react)
- It must ensure certain stability and security to the administrative personnel from the risks that may affect
- Improves the agility of risk arrest systems to better adapt to the environment in a timely manner
- Improve communication and information exchange
Elements of Enterprise Risk Management
These are the components that are part of risk management in the company.
- Internal or company environment
- Setting achievable business goals
- Identification of events or events that may occur
- Risk assessment
- Respond to risks
- Have control activities that assess that everything is working properly
- That the information and communication is effective
- Supervision by a coordinator and managers