Enterprise Risk Management
What is Enterprise Risk Management (ERM)? ERM can be viewed as a natural evolution of the process of risk management. The Committee of Sponsoring Organizations of the Treadway Commission (COSO) defines enterprise risk management as: “Enterprise risk management is a process, effected by an entity’s board of directors, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives.” The COSO definition is intentionally broad and deals with risks and opportunities affecting value creation or preservation. Similarly, I take a broad view of ERM, or what I call – a holistic approach to ERM.
Some sources have referred to ERM as a new risk management paradigm. As in the past, many organizations continue to address risk in “silos,” with the management of insurance, foreign exchange risk, operational risk, credit risk, and commodity risks each conducted as narrowly focused and fragmented activities. Under ERM, all risk areas would function as parts of an integrated, strategic, and enterprise-wide system. And while risk management is coordinated with senior-level oversight, employees at all levels of the organization using ERM are encouraged to view risk management as an integral and ongoing part of their jobs. It is important to note that the leading global credit ratings agencies now include whether firms (both financial and nonfinancial) have ERM programs as part of the credit ratings process.
The aim of the course I teach at Trinity College Dublin is to provide students with a comprehensive study of enterprise risk management and conceptual guidance for enterprise risk management (ERM) implementation. The course provides a blend of academic and practical experience on ERM in order to educate students about this evolving methodology. Furthermore, my goal is to provide a holistic coverage of ERM, and in this process, provide the ‘what’, ‘why’, and ‘how’ of ERM.
My Publications on ERM
“Who Reads What Most Often? A Survey of Enterprise Risk Management Literature Read by Risk Executives” by John R.S. Fraser, Karen Schoening-Thiessen, and Betty J. Simkins, Journal of Applied Finance Vol. 18 (No. 1, Spring/Summer), 2008, 73-91.
“Enterprise Wide Risk Management and Corporate Governance” by Betty J. Simkins and Steven A. Ramirez, Loyola University Chicago Law Journal Vol. 39 (No. 3, Spring), 2008.
“Enterprise Risk Management: Current Initiatives and Issues -- Journal of Applied Finance Roundtable”, Panelists: Bruce Branson, Pat Concessi, John Fraser, Michael Hofmann, Robert Kolb, Todd Perkins, and Joseph Rizzi; Moderated by Betty Simkins, Journal of Applied Finance Vol. 18 (No. 1, Spring/Summer), 115-132.
“Ten Common Misconceptions About Enterprise Risk Management” by John R.S. Fraser and Betty J. Simkins, Journal of Applied Corporate Finance Vol. 19 (No. 4), 2007, 75-81.
“Academic Research on Enterprise Risk Management”, by Subbu Iyer, Dan Rogers, and Betty J. Simkins, to be published in Wiley’s Enterprise Risk Management: Today's Leading Research and Best Practices for Tomorrow’s Executives, Chapter 23, Forthcoming in 2009.
This page was last updated on August 4, 2009.