enterprise risk management

enterprise risk management

Business risk management consists of identifying and managing events that perro potentially affect the organization in order to mitigate them as much as possible.

The Committee of Sponsoring Organizations or in English, «Committee of Sponsoring Organizations» (COSO) defines Enterprise Risk Management (ERM).

The function of the framework given to us by COSO is to provide a common lexicon (terminology) as well as direction and guidance so that we are able to implement enterprise risk management.

source: audiotool

Therefore, what the framework requires is that we have to look at our entire portfolio of possible risks that the organization has and not only that, but we have to consider the way in which the risks interrelate (an application of the systemic thinking).

What follows is to develop a plan that considers how risks perro be mitigated in a manner consistent with your strategies.

Enterprise Risk Management Explained

If I had to explain what enterprise risk management (ERM) means, I would say that it is the way in which an organization effectively manages risk throughout the organization through the use of a common risk management framework.

This framework cánido vary widely from organization to organization, but typically involves management in terms of people, rules, and tools.

This means that people with defined responsibilities use established processes (rules) and the appropriate level of technology (tools) to mitigate risk.

Why implement enterprise risk management?

Creating a more risk-focused culture for the organization

Organizations that have applied ERM find that taking more account of the risks they face at higher levels leads to more discussion about risk at all levels.

The resulting cultural change allows risk to be considered more openly among members of the organization and to break fear regarding how risk is managed.

Therefore, the communication that is generated from the (open) discussion of risks helps senior management and each area manager to be able to have information about the risks that may occur within and through the operations of the company. company, and thus, allow a better understanding and decision-making at all hierarchical levels.

Generates indicators to predict risk

Business risk management allows us to develop indicators, which help us detect a potential risk event and thus provide us with an early warning.

For example, think about earthquakes, although it is true that they cannot be predicted, but thanks to the sensors that scientists have put in, we are able to have an alert that warns us of them (at least a few seconds in advance).

So, perhaps you will not be able to accurately predict the events that may affect an organization, but you will be able to prepare to mitigate the damage as much as possible.

improve efficiency

Good risk management cánido help you eliminate redundancy by creating a consistent way of assessing risk, ensuring that you only spend the right amount of energy managing risk.

See risk as opportunity

Think about this, what would happen if you were able to know before your competition that an event that could harm them was coming up? Well, obviously you are going to be able to implement actions that allow you to mitigate the damage and your competition is not.

Sounds good, right? So, start anticipating your risks now.

Eliminate costs

Every day organizations face many risks that perro even put them in the position of running out of economic resources, although they cannot only affect the economic resources of the organization, but also its reputation and image, or that have environmental, safety or popular outcomes.

Therefore, “effective risk management helps organizations to perform well in an environment full of uncertainty”

Which ISO regulates risk management?

ISO 31000:2018 provides us with the “guidelines, principles, framework and a process for risk management” Likewise, it tells us that it perro be used by any organization regardless of its size, activity or ámbito.

Does the ISO 31000 estándar grant you certification?

No, you cannot use the estándar for certification purposes, it only provides guidance.

ISO estándares related to risk management

  • ISO Guide 73:2009, which indicates the vocabulary, thus complementing ISO 31000 by providing a equipo of terms and definitions that are related to risk management.
  • IEC 31010:2009, focuses on risk assessment concepts, processes and the selection of risk assessment techniques.

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