Enterprise Risk Management
Enterprise risk management is a business strategy composed of plans, processes and controls that attempt identify risks, mitigate exposure to risk, minimize the impacts of risks, and prepare for risks should they turn into a reality. Enterprise risk management touches all areas of an organization from sales to operations, to marketing, competitor, regulations, customers and of course, financial losses and cash flow.
The goal of enterprise risk management is to identify and plan for risks to protect a business against detrimental risks. Enterprise risk management usually entails a process of risk identification, assessing the likelihood of the risk occurring, the degree of impact, the response strategy, and then planning to ensure the risk can be avoided.
Some risks, like natural disasters, can be managed by insurance. But there’s also risks associated with supply chains, cash flow, employees, and of course, big data. Enterprise risk management often evokes a conversation around data integrity and internals controls, which loops back to the Sarbanes Oxley Act and other regulatory actions which serve to both ensure companies are monitoring and managing risks accurately so external stakeholders are aware of risks facing their interests.