SSRN-id2711229 - Electronic copy available at The Journal...

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Electronic copy available at: The Journal of Enterprise Risk Management, vol. 1, issue 1 72 Enterprise Risk Management and the Five Lines of Corporate Defense Sean Lyons a Abstract Analysis of the global financial crisis has served to highlight the requirement to improve existing ERM oversight and this requirement particularly applies at the strategic level of the board and executive management. For an ERM program to operate effectively there needs to be appropriate risk oversight in place at all levels including strategic, tactical, and operational. Applying the extended five lines of corporate defense oversight model to the ERM program can help to address this requirement by helping to ensure that all strategic, tactical, and operational roles and responsibilities are clearly outlined, and to provide a mechanism for holding individuals (or groups) to account for the performance of these duties. Keywords: Enterprise, Risk, Defense, Governance, Oversight a Principal, R.I.S.C. International (Ireland). Email: [email protected] Selected Corporate Defense Publications:
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Electronic copy available at: The Journal of Enterprise Risk Management, vol. 1, issue 1 73 The Delivery of Long-Term Sustainable Value In the 21 st century more and more organizations are now focusing attention on the concept of sustainability and the strategic objective of delivering long-term sustainable value to their multiple stakeholders. In this regard an increasing number of stakeholders now believe that an organization has a corporate responsibility to safeguard their stakeholder interests and this responsibility includes protecting and valuing these interests, with a view to ensuring the long term sustainability of their stakeholder value. Unfortunately the impact of the global financial crisis and the resulting economic recession has served to highlight serious flaws in corporate behavior and has clearly exposed a mindset of excessive risk taking in search of short-term rewards. The subsequent fallout from such reckless behavior has meant that not only shareholders, but also management, staff, clients, business partners, suppliers, regulators, local communities, and society in general have all eventually suffered as a result (UNCTAD, 2010). Not surprisingly the reputation of the corporate world has therefore been severely tarnished in the eyes of many of these stakeholders. As a consequence there has been increased stakeholder focus on (and scrutiny of) corporate affairs as stakeholders are now demanding higher standards of corporate citizenship, and improved corporate oversight and supervision in order to provide them with greater protection and assurance going forward. Such stakeholder pressure has prompted organizations to reassess their corporate strategy and business models in a search for an improved approach to delivering long-term sustainable into the future.
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