Description and Importance of Implementation of ERM Program
The implementation of ERM program is crucial as risk identification and the consequent process of risk management are important in the context of a business enterprise. It has been observed that the present day companies have separate operational units that deal with separate risks.However, there are different types of risks that are faced by a particular business enterprise. This is where a proper ERM program or an enterprise risk management program becomes useful.
Basic Aim of Implementation of ERM Program
The primary aim of the implementation of the ERM program is to bring improvement in the efficiency as well as co-ordination of the various risk management units of a particular business enterprise. A proper ERM program is also designed with the purpose of improving the risk management efficiency of a particular organization. The ERM programs also incorporate the production of an organization in order to give to the shareholders a proper idea of the risk they might be facing.Functions of ERM Program
The basic functions of an ERM program may be mentioned as below:- Internal Audit
- Strategic Planning
- Treasury
- Marketing
- Operational Quality Assurance
- Compliance and Ethics
- Operations Management
- Accounting or Financial Compliance
- Credit
- Law Department
- Customer Service
- Insurance
Difficulties in Implementation of ERM Program
There are several problems that are faced by the business organizations when they try to implement an ERM program:- Locating some executive sponsors for the ERM program
- Showing the cost benefit details of the risk management efforts
- Building up a risk terminology that is common
- Making plans of action to make sure that the risks are properly managed
- Finding out and explaining the risks in a risk inventory
- Making well developed reports for the different shareholders
- Employing a methodology for ranking the risks. This is used to prioritize the risks inside as well as across functions.
- Looking after the results of the risk preventive measures
- Finding out a risk committee along with a chief risk officer in order to look after specific operations of the risk functions
- Making sure that the risk is covered properly by the consulting teams, the internal auditors and the other authorities that are supposed to perform such activities
- Constituting an ownership for the purpose of specific risks as well as their responses
