Enterprise Risk Management
Certain amount of risk is associated with all types of business operations. At the same time, there are a number of growth opportunities that are also related to the business.
For the overall development, it is essential that these risks are hedged properly so that they cannot cause any kind of loss to the business or even if it causes any harm, the effects can be minimized as much as possible. On the other hand, it is also necessary that the provided opportunities are used in the best possible way.
Types of Enterprise Risk Management
There are two types of enterprise risk management. These are the RIMS and COSO.
Both these types share some common objectives like locating the hidden risk factors and providing solutions to hedge the risk. At the same time, these risk management strategies are also conscious about monitoring the development of the risk hedging strategy. The monitoring activities are also very important to take hold of the market opportunities. Application of RIMS or COSO depends on the particular situation and is subjected to the approval of the management.
Uses of Risk Management
The business sector uses the model of enterprise risk management to develop such machinery that is worthy enough to mark definite events that would cause any kind of loss or profit to the businesses. Enterprise risk management also helps in categorizing these risks so that they can be handled appropriately. At the same time, there may be one or more departments in a company to handle the risk factors. Enterprise risk management also has the responsibility of increasing coordination between these departments. Apart from these, there are some other functions also.
These are the following:
- Identifying the potential customer base and designing the products according to their needs
- Taking care of the legal procedures related to the business
- Assuring continuous generation of funds
- Operational management
- Developing the quality of customer service
- Internal audit