Contemporary Risk Management Case Study

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4.0 Effectiveness of contemporary risk management frameworks in delivering the strategic level benefits
Enterprise Risk Management (ERM) approach is the initial effort to appreciate the linkages between risks and the handling of risks across all business processes (Institute of Management Accountants, 2011). The all-inclusive approach that is characteristic of the modern trend of risk management, which some text refers to as enterprise-wide risk management, enterprise risk management (ERM), strategic risk management, or integrated risk management, has the intention of dealing with insecurity for the organization through creation, protection, and enhancement of shareholder value by the management of uncertainties that could negatively impact …show more content…

This will help the organization in the reduction of losses, enhancement of business processes, reputation improvement, enhancement of control over the business, reduction of penalties and information security. The COSO ERM framework Implementation should take the following factors into consideration in order to ensure realization of the strategic level benefits (Nazir, …show more content…

EWRM framework stresses on risk communication which is vital for its successful implementation. The sharing of relevant risk information at all levels of the organization through the Chief Risk Officer in order to ensure that there is buy in and ownership in the initiatives will go a long way in realizing the strategic level benefits of this framework(Louw, 2007). EWRM focuses on enhancement of shareholder value through improved business strategies, management of relationships, appropriate pricing of products, management of capital and transfer of risk using a five-step practical approach of establishing the business case, securing the best resources, developing a framework, use of pilots and prototypes and finally staying on course (Lam & Litwin, 2002). While EWRM is not a panacea to all investment challenges, it provides management with the requisite tools to balance uncertainty and value, hence avoiding expensive mistakes by improving risk awareness & reporting, realization of savings, reduction of capital cost, improvement of

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