Lecture-5-BRM-2101-Introduction-to-Risk-Management-and-Enterprise-Risk-Management.pdf

Lecture-5-BRM-2101-Introduction-to-Risk-Management-and-Enterprise-Risk-Management.pdf

Info icon This preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
1 LECTURE 5 INTRODUCTION TO ENTERPRISE RISK MANAGEMENT Learning Objectives When you have finished this chapter, you should be able to do the following: Describe the benefits of ERM Describe the responsibility of the Chief Risk Officer Components of ERM
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
2 The Benefits of ERM ERM is all about integration, in three ways. First, enterprise risk management requires an integrated risk organization . This most often means a centralized risk management unit reporting to the CEO and the Board in support of their corporate-and board-level risk oversight responsibilities. A growing number of companies now have a Chief Risk Officer (CRO) who is responsible for overseeing all aspects of risk within the organization. Second , enterprise risk management requires the integration of risk transfer strategies . Under the silo approach, risk transfer strategies were executed at a transactional or individual risk level. For example, financial derivatives were used to hedge market risk and insurance to transfer out operational risk.
Image of page 2
3 The Benefits of ERM ERM is all about integration, in three ways. Third , enterprise risk management requires the integration of risk management into the business processes of a company . Rather than the defensive or control-oriented approaches used to manage downside risk and earnings volatility, enterprise risk management optimizes business performance by supporting and influencing pricing, resource allocation, and other business decisions.
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern