Page 23 - Insurance Times August New 2023

The Holistic

approach towards

Enterprise Risk

Management

Sanjay Singh
(ERM) MBA-Ins, Fellow-III, DCII-London
Senior Manager-Underwriting
Shriram General Insurance Co Ltd

ERM looks at each business unit as a "portfolio" within the firm and tries to understand how risks
to individual business units interact and overlap. It is also able to identify potential risk factors
that are unseen by any individual unit. The Government ambitious plan of PM GatiSakti is the
fine example of how ERM is being followed on principle.

Introduction: firm wide opportunities. Communicating and coordinating
between different business units is key for ERM to be
Enterprise risk management (ERM) is a methodology that
successful, since the risk decision coming from top
looks at risk management strategically from the perspective
management may seem at odds with local assessments on
of the entire firm or organization. It is a top-down strategy
the ground. Firms that utilize ERM will typically have a
that aims to identify, assess, and prepare for potential losses,
dedicated enterprise risk management team that oversees
dangers, hazards, and other potentials for harm that may
the workings of the firm.Modern businesses face a diverse
interfere with an organization's operations and objectives
set of risks and potential dangers.
and/or lead to losses. The Successful ERM strategies can
mitigate operational, financial, security, compliance, legal,
In the past, companies traditionally handled their risk
and many other types of risks. Enterprise risk management
exposures via each division managing its own business.
takes a holistic approach and calls for management-level
Enterprise risk management calls for corporations to identify
decision-making that may not necessarily make sense for an
all the risks they face. It also makes management decide
individual business unit or segment.
which risks to manage actively. As opposed to risks being
siloes across a company, a company sees the bigger picture
Thus, instead of each business unit being responsible for its
when using ERM. ERM looks at each business unit as a
own risk management, firm-wide surveillance is given
"portfolio" within the firm and tries to understand how risks
precedence. It also often involves making the risk plan of
to individual business units interact and overlap. It is also
action available to all stakeholders as part of an annual
report. Industries as varied as aviation, construction, public able to identify potential risk factors that are unseen by any
health, international development, energy, finance, and individual unit. The Government ambitious plan of PM
insurance all have shifted to utilize ERM. ERM, therefore, GatiSakti is the fine example of how ERM is being followed
can work to minimize firm wide risk as well as identify unique on principle.
18 August 2023 The Insurance Times