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on 22-Apr-10 03:12.
Best Practices for Structuring ERM Within the Organization
Originally Published: September 01, 2005
Upon conducting in-depth interviews with risk managers in the investment banking industry, the authors find significant differences of opinion on how risk management should be structured within the business. Three main areas of focus emerged:
The role of modern portfolio management tools in risk management
What the "independence" of enterprise risk management (ERM) really means
How much authority the risk management function should be given
Measurement Tools in Enterprise Risk Management
on 22-Apr-10 03:11.
Balancing Enterprise Risk Management and Enterprise Performance Management
Originally Published: June 01, 2009
Poorly planned and executed risk management capabilities contributed to the recent economic collapse, and they are likewise impeding the recovery as companies have shifted from taking too many risks to taking too few. Effective risk management requires finding the balance between prevention and value generation. This balance can be achieved by integrating enterprise risk management with enterprise performance management so that the risk and performance parts of an organization work together towards a common goal.
How and Why Risk Management Processes Failed
There are several factors that contributed to the recent widespread failure of risk management systems. One factor was the complexity and speed of the 2008 market collapse, which outpaced companies' abilities to keep up from a risk management standpoint. Another contributing factor was the fragmented, incomplete information most companies received, limiting the ability to adequately identify and mitigate risks in a timely manner. Non-integrated ERM capabilities also contributed as only 8% of organizations in a recent Accenture survey reported having centralized, fully integrated risk management capabilities used across the enterprise. This lack of integration leads to redundancy and increased costs in a time when budgets are tightening.
on 22-Apr-10 03:09.
Audit Committee Oversight of Enterprise Risk Management
Originally Published: April 01, 2008
Key stakeholders are pressuring boards of directors to better handle near-term risks and to identify strategic risks that might affect future operating performance. More companies are implementing enterprise risk management (ERM) to identify strategic and operating risks, in addition to financial risks, and define the organization's overall risk appetite.
Rising Expectations for the Audit Committee
Boards are seeking more risk intelligence to help them evaluate the trade-offs between risk and return when weighing strategic alternatives. The audit committee is responsible for oversight of the internal and external auditors as well as financial reporting. In part because the assessment of internal controls over financial reporting is risk-based, the audit committee is increasingly being charged with overseeing management's risk policies and discussing the enterprise's key risk exposures with management. Audit committees charged with risk oversight are placing demands on management for more information about key risk exposures and risk management processes.
on 22-Apr-10 03:08.
The State of Enterprise Risk Management at Colleges and Universities
Originally Published: July 01, 2009
The Association of Governing Boards of Universities and Colleges and United Educators conducted a survey in June 2008 regarding attitudes, practices, and policies about ERM at American colleges and universities. There were over 600 respondents from a mix of private and public schools of different sizes, with presidents and chancellors, CFOs, governing board members, chief academic officers, and risk managers comprising most of the respondents. Survey responses indicate that higher education is lagging behind private industry in considering risk at the strategic level.
on 22-Apr-10 03:08.
ENTERPRISE RISK MANAGEMENT: A DAILY EXERCISE
By Dave Lindorff
While the financial meltdown was a sock in the eye for risk management as it had been practiced, the crisis has also underscored the need for organizations to put in place a well-integrated and solid process according to a soon-to-be-released report from Marsh Inc.'s enterprise risk management (ERM) practice and GovernanceMetrics International, the corporate governance research and ratings group.
The report highlights the case of Tyco International, a $20-billion diversified industrial company, which seven years ago was a risk manager's nightmare. Its CEO indicted and later convicted of defrauding shareholders of $400 million and its books cooked beyond recognition, Tyco was often mentioned in the same breath as Enron and WorldCom. Today, broken up, restructured and under completely new management, Tyco has put risk management front and center in its strategic planning and operations.
"Today risk management is a component of how this company operates on a day-to-day basis," says John Jenkins, Tyco's corporate secretary. "So, for example, with strategic planning, it's not a matter of the risk manager sitting on the side and suddenly chiming in; it's just a component of the whole process."
That, Christie Kaufman, vice president of Marsh Risk Consultancy and one of the three authors of the Marsh/GMI study tells Treasury & Risk in an exclusive, is the way risk management ought to work.
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