Enterprise Risk Management (ERM) Implementation

The Commission of Sponsoring Organizations (COSO) defines ERM as follows:

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.

What does this mean? A successful ERM implementation begins with support from the top, engages all areas of an organization, recognizes and manages risk within the corporate risk appetite and provides reasonable assurance that the organization will meet its objectives. The underlying assumptions include a common risk language, risk management embedded in the culture of an organization to the point where it is second nature. One where the observation of unacceptable risk behavior elicits the comment, “That could not possibly be any of our people.”

Why is this important?

With rapid operational change and significant risks changing daily, organizations need a communication mechanism that provides timely information and quick response. Today more than ever, companies need to develop a risk culture that embeds risk management into the very DNA of the organization. It should be a part of daily operations and cover all areas and activities. This is not about a Risk Officer doing a risk assessment; this is about developing a common risk language and understanding of risk throughout the organization.

Value to the Client

ERM provides a mechanism to deal with uncertainty, by mitigating risks and taking advantage of opportunities with an increase in the capacity to build value. Fully implemented ERM results in the entire organization being able to work together to:

• Align risk appetite with strategy
• Respond appropriately to risks
• Build awareness with a reduction in operational surprises
• Manage risk across the enterprise, not in silos
• Take advantage of opportunities

Why hire M&A?

M&A will work with your organization to develop an ERM strategy that leverages existing processes, develops a common risk language, provides risk awareness throughout the organization and is a sustainable process. We take pride in training your organization to take ownership of the process, a key element in effective strategy implementation.

Contact the M&A Risk Management Services Team at ENissley@macpas.com for more details, and subscribe to The RMC Advisors blog at www.theRMCadvisors.com to receive updates on relevant accounting and audit information!