‘The Risk Intelligent Enterprise ERM Done Right’

Enterprise risk management may be a hot topic in the business community, yet it might also be the most misunderstood, with little consensus regarding philosophy, methodology, or even an agreed-upon definition of the term.

To address this lack of accord or consistency, Deloitte & Touche LLP has published a new whitepaper, ‘The Risk Intelligent Enterprise: ERM Done Right.’

In the paper the concept of ‘risk intelligence’ is introduced and associated best practices are discussed.

The defining characteristics of The Risk Intelligent Enterprise are outlined, including:

* A risk management philosophy that focuses not solely on risk avoidance, but also on risk-taking as a means to value creation;

* Risk management practices that encompass the entire business, creating connections between the ‘silos’ that often arise within large, mature, and/or diverse corporations;

* Risk management strategies that address the full spectrum of risks, including industry specific, compliance, competitive, environmental, security, privacy, business continuity, strategic, reporting, and operational risk;

* Risk assessment processes that augment the conventional emphasis on probability by placing significant weight on the notion of vulnerability.

* Risk management approaches that do not solely consider single events, but also take into account risk scenarios and the interaction of multiple risks.

Mark Layton, global leader of Enterprise Risk Services at Deloitte & Touche LLP, stated, "Getting risk management right has never been more important. Executives and boards need to realize that organizations that effectively manage risks - both to existing assets and to future growth - will, in the long run, outperform those that don't."

Silos must be bridged and specialized approaches must be broadened, said Layton , and risk-taking for reward should get as much attention as defensive risk management. "Simply put," he said, "companies make money by intelligently taking risk and lose money by poorly managing it. Of course, at stake is not only earnings and market cap., but also opportunities for growth, gains in market share, and the ability to become viewed as an industry leader."

•Date: 14th June 2006• Region: N.America/World • Type: Article •Topic: Op. risk
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