HOW YOU CAN IMPLEMENT ERM SYSTEM IN YOUR ORGANIZATION WHICH STEPS ARE GOING TO TAKE “Risk is like fire: if controlled it will help you; if uncontrolled it will rise up to destroy you” -Theodore Roosevelt- US President 1901-1909
Risk can be defined as the deviation from the expected’. Though the word risk has negative connotations, risk can result in either gain or loss to the company. ERM in business includes the methods and processes used by organization to manage risk and size opportunities related to the achievement of their objectives. It will provide a frame work for risk management. Due to shifting economic condition, technological advances, emerging markets, geopolitical threats, and change regulatory environments have forced to turn into our organization enterprise risk management. Goals of our organization an ERM program
Organization by nature manages risks and has a variety of existing departments of functions that identify and manage particular risk. However, each risk function varies in capability and how it coordinates with other risk functions. A central goal and challenge of ERM is improving this capability and coordination, while integrating the output to provide a unified picture of risk for stakeholders and improving the organization’s ability to manage the risks effectively. Expect objectives of the enterprise Risk Management frame work are 1. Construct risk appetite and risk tolerance level
2. Promote and further develop the existing risk culture. 3. Structure the design and implementation of controls
4. Identify and assess risk that is retained by the firm. 5. Enable management to quickly respond to unexpected outcome.
We have to identify the following primary risk function that may participate our organization in a ERM program typically include 1. Strategic Planning - Identifies external threats and competitive opportunities, along with strategic to address them. 2. Marketing – understands the target customer to ensure product, service alignment with customer requirement 3. Compliance and ethics-monitor compliance with code of conduct and direct fraud investigations. 4. Accounting and Financial compliance-Identifies financial report risk 5. Law Department-Manage litigation and analyses emerging legal trends that may impact the organization. 6. Treasury-ensures cash is sufficient to meet business needs. While managing risk related services prices. 7. Customer service- ensures customer complaints are handled promptly and root causes are reported to operations for resolution. 8. Internal Audit- evaluates the effectiveness of each of the above risk function and recommends improvement. Common Challenges to implement the ERM risk culture
1. Executive sponsors for ERM.
2. Establishing a common risk languages
3. Describing the entity’s risk appetite.
4. Identify and describing the risk in a risk inventory.
5. Implementing risk ranking methodology
6. Establishing risk ownership for particular risks and responses 7. Demonstrating the cost benefit of the risk management effort. 8. Developing action plans to ensure the risks are appropriately managed. 9. Developing consolidated reporting for various stakeholders. 10. Monitoring the results of actions taken to mitigate risk. 11. Ensure efficient risk coverage by internal auditors, consulting team and other evaluating entities. 12. Developing a technical ERM frame work that enables secure participation by 3rd parties and remote employees.
However Ceylinco Insurance life Division currently makes an effort to establish risk culture to achieve the strategic objectives.
Risk culture in Ceylinco Insurance Life Division
A strong risk culture is pivotal to corporate Governance and the achievement of corporate objectives.Ceylinco Insurance believes that the essential aspects of a vibrant risk culture are: 1. Ethics and integrity
3. Transparency and...
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