risk map - 26 C HAPTER 2 I ~ U NDERSTANDING R ISK M...

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~ 26 CHAPTER 2 I UNDERSTANDING RISK MANAGEMENT Enterprise Risk Management in Practice If ERM is considered a part of a corporate culture in which all risk management decisions are made under the guidance of an individual executive, then it has been practiced by small organizations for years. In a small organization, one individ- ual or a small group of individuals often assesses all risks the organization faces and determines how to allocate limited resources to best manage the risks that have the greatest effect on the organization. However, ERM is now being implemented by large organ- izations as well. The risk management professional no longer needs to sell the importance of risk management to senior executives because risk management is no longer viewed as a cost center, but as a way to add value to the organization. In ERM, a risk management executive exhibits top-down control. One of the barriers to successfully implementing ERM in large organizations involves the balance of control between the various departments. Some departmental man- agers may be reluctant to relinquish control of risk-related decisions previously made within their departments. For example, the finance department may be reluctant to surren- der ultimate control of foreign exchange rate risk. In addi- tion, the internal audit and risk management departments may disagree about who should be in charge of the ERM I program. Mid-sized organizations have been slower to adopt ERM, often because they are large enough to need a dedi. I, cated risk management function yet do not have the resources to implement a full ERM corporate structure.
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risk map - 26 C HAPTER 2 I ~ U NDERSTANDING R ISK M...

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