The paper 'Enterprise-Wide Approach to Risk Management" is a perfect example of business coursework. Enterprise risk management plays a vital role in ensuring that in each of the entities that do exist have their specific values for their given stakeholder. This is a central part of the strategic management for most of the organizations. The organizations are able to address the risks attached to their activities methodically and even build their capacity as noted by Islam and Tedford (2008, p. 420). For this to be purposeful, the risk management must be proportionate to the level of the risk attached in the organization that has as well been aligned together with other corporate activities.
Lam (2003) claims that enterprise risk management (ERM) should be comprehensive in scope, dynamic and responsive to the changing situations. Its focus should be to assess significant risks and be able to provide significant solutions to them. It should achieve maximum sustainable value from all the activities in the organization. The downward and potential upward factors that can probably affect the organization are harmonized (McKay, 2011; Pohlmann and Tim, 2002).
The ERM reduces the probability of failure and uncertainty level that is associated with the organization's objectives and increases the probability of success in the organization. This paper gives an evaluation of the enterprise approach to risk management in organizations. Firstly, there are several principles that guide the management of enterprise risks as noted by Olson and Desheng (2008). These include: Embedding: The ERM and internal control framework have to be fully embedded in the major operational processes in the same way as strategic planning and performance measurement is done. Risk awareness; the results obtained would form the basis of the decision making process to ensure proper policies are made. Proper funding and evaluation; the required resources should be well allocated by considering the risks that may affect the achievement of the objectives which are applicable to each of the organizational units as well as, at the fund wide level.
The relevant risks require to be well evaluated in the evaluation of the programs as well as, the relevant budget allocations. The ERM should have its inclusion during the preparation of the budget and when it is under the review processes. Ownership; middle and senior managers as well as, the risk owners should have a proper understanding of the risks that impact their operations and are able to identify the strategies and mechanisms that will assess, monitor and control the risks associated with it. Accountability; the owners of the risks, the middle managers as well as the senior managers are responsible for the actions of management in their responsibilities.
The governing bodies give adequate oversight, control, review and approve the strategies that have been prepared by management. Consistency: As part of its decision-making process, the fund should adopt a consistent method to identify, assess, monitor, mitigate, control and be able to communicate risks associated with any of its processes so as to efficiently and effectively achieve its objectives. Authority; the middle and senior managers as well as, the risk owners should have a certain level of authority and flexibility that will determine and execute the proper action to be taken to manage the risks in their responsibility areas. Communication; the data outputs will be considered in designing the funds information systems that will need to be designed and updated so as to have proper risk assessment and monitoring.
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