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Enterprise Risk Management (ERM) is a structured and disciplined approach that aligns strategy, processes, people, technology, and knowledge to evaluate and manage the uncertainties that enterprises face.

COSO ERM Framework

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) developed a comprehensive framework that integrates ERM into strategic planning and performance management. It emphasizes a top-down, holistic approach where risk management is embedded in the organizational culture and decision-making processes. The framework is divided into five interrelated components: Governance and Culture, Strategy and Objective-Setting, Performance, Review and Revision, and Information, Communication, and Reporting.

ISO 31000

The International Organization for Standardization (ISO) provides guidelines on risk management through ISO 31000. This approach offers principles, a framework, and a process for managing risks that can be applied to any organization regardless of size, activity, or sector.

RIMS Risk Maturity Model (RMM):

Developed by the Risk and Insurance Management Society (RIMS), this model helps organizations assess their risk management practices and maturity levels. It provides a roadmap for continuous improvement and alignment with business objectives. RIMS RMM outlines seven attributes of an effective ERM program: adoption of an ERM-based approach, ERM process management, risk appetite management, root cause discipline, uncovering risks, performance management, and business resiliency and sustainability.

FERMA Framework

The Federation of European Risk Management Associations (FERMA)
offers guidelines tailored to the European context, emphasizing the integration of risk management with corporate governance. FERMA focuses on creating a risk-aware culture and ensuring that risk management practices support the organization’s strategic goals.

Balanced Scorecard (BSC) and ERM:

The Balanced Scorecard is a strategic management tool that can be integrated with ERM to ensure that risk management aligns with organizational objectives. By incorporating risk indicators into the four perspectives of the BSC (financial, customer, internal processes, and learning and growth), organizations can better anticipate and manage potential disruptions.

Integrated Frameworks

Many organizations opt for customized ERM frameworks that blend elements from multiple standards and guidelines to suit their specific needs. These integrated frameworks allow for flexibility and adaptability, enabling organizations to respond effectively to their unique risk landscapes.

ERM approaches provide a structured methodology to identify, assess, manage, and monitor risks across the enterprise.

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