Enterprise Risk Management (ERM) is the activity of risk identification, assessment, and management. It is a management system and a process providing professional guidance to the organization, integrating risk management into all areas of an organization’s business, delivered by senior management, and supported by their leadership.

ERM does not replace high-level strategy and planning but is a critical component of ensuring a successful organization. ERM is now an integrated part of corporate decision-making that ensures a structured understanding of the business activity, volatility, and project opportunity/threat to support the organization’s objectives.

– Prepare an objective.
– Determine the scope of risk activities.
– Plan a systematic approach to risk identification, measurement, and monitoring.
– Forecast the potential impact of risk events and management strategies on overall organizational performance.
– Analyze the effectiveness of risk strategies, programs, and policies on the organization’s – performance and position.
– Monitor risks in accordance with reporting criteria, standards, and policies.
– Measure and communicate the level of risk in a value-added fashion by applying.

Risk Management was traditionally studied with a focus on Financial Risk or Insurance Risk. While both those areas of risk are important, ERM’s global qualifications cover Enterprise Risk Management and ERM is a much broader concept since it covers risks across the entity in all departments and all sectors, including supply chain, operations, human resources, marketing, branding & reputation, research & development, treasury, sales and much more. Additionally, financial risk management is a more quantitative subject, whereas ERM is more qualitative.