Risk management is the process of planning, organizing, leading, and controlling the activities of an organization in order to minimize the effects of risk on an organization's capital and earnings. Enterprise risk management (ERM) expands the process to include not just risks associated with accidental losses, but also financial, strategic, operational, and other risks.
In recent years, external factors have fueled a heightened interest by organizations in ERM. Industry and government regulatory bodies, as well as investors, have begun to scrutinize companies' risk-management policies and procedures. In an increasing number of industries, boards of directors are required to review and report on the adequacy of risk-management processes in the organizations they administer.
An organization’s ERM goal will be to strike a balance between risk and value and value creation. Without accepting a certain level of risk, there can be no growth. Every organization’s risk tolerance and risk appetite are different. The ERM process allows the organization to:
- understand its risk appetite and how that relates to weighing strategic alternatives
- identify and manage cross-enterprise risk
- effectively exploit opportunities as they arise
- improve allocation of resources (people, capital, time…)
To learn more about how your organization can utilize Enterprise Risk Management, contact Rollins Insurance.