A planned approach to minimizing risk should include consideration of how risks and hazards can interact and even mitigation techniques can result in new and/or compounded risk for the organization. In order to lessen or perhaps eliminate these sorts of risks/hazards an enterprise (integrated) risk management approach should be a part of the overall risk management plan.
General Benefits of ERM
The benefits of an integrated risk management approach include:
- Alignment of risk at all levels to meet organizational objectives,
- More focus internally on doing the right things the right way,
- Greater management focus on the things that really matter,
- Accountability for and ownership of risk management,
- The capability to combine and compare information about the current state of risk exposure at the planning, operating and process levels,
- An ability to foresee and predict risk occurrence, and take preventative action - minimize costly time "fighting fires"
- Optimize risk taking by the organization,
- Capability to take on greater risk for greater reward , and
- More informed risk-taking and decision-making.
Direct Benefits of Enterprise Risk Management
No Surprises - Early Warning Systems
- Identify, assess and prioritize risks
- Install appropriate control processes and information
- Promote organizational learning and knowledge transfer
Effective Responses - Good Reactions
- Integrate risks into planning and decision-making
- Strategically reduce exposure levels to acceptable levels
- Rapidly respond to issues and reduce negative impacts
Greater Chance of Success - Better Outcomes
- Maximize chances of achieving objectives
- Improve ability to anticipate and prepare for change