Enterprise Risk Management - Integrating with Strategy and Performance

This new 2017 update highlights the importance of considering risk in both the strategy-setting process and in driving performance. The first part of this updated publication offers a perspective on current and evolving concepts and applications of ERM.

The second part, the Framework, is organised into five easy-to-understand components that accommodate different viewpoints and operating structures, and enhance strategies and decision-making. This new version replaces COSO Enterprise Risk Management- Integrated Framework from 2004.

In short, this update:

• Provides greater insight into the value of ERM when setting and carrying out strategy
• Enhances alignment between performance and ERM to improve the setting of performance targets and understanding the impact of risk on performance
• Accommodates expectations for governance and oversight Recognises the globalisation of markets and operations and the need to apply a common, albeit tailored, approach across geographies
• Presents new ways to view risk to setting and achieving objectives in the context of greater business complexity
• Expands reporting to address expectations for greater stakeholder transparency
• Accommodates evolving technologies and the proliferation of data and analytics in supporting decision-making

Key features and benefits:

• Focused framework that is easy to follow with 5 interrelated components broken up into 20 different principles
• The principles are manageable in size, and they describe practices that can be applied in different ways for different organisations regardless of size, type, or sector.
• Adhering to these principles can provide management and the board with a reasonable expectation that the organisation understands and strives to manage the risks associated with its strategy and business objectives.

Framework is future-focused and discusses several trends that entities are likely to face and will have an effect on ERM, such as:

• Dealing with data proliferation
• Leveraging artificial intelligence and automation
• Managing the cost of risk management
• Buidling stronger organisations