Page 75 - RISK Management IC86 Ebook

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l Lastly, both definitions stress the value creation. Instead
of risk minimization, the goal is seeking an appropriate
"risk-return position."

n All significant organizational risks should be included within
the scope of ERM processes.

A context for risk

n The goal of ERM is to effectively manage risks facing the
organization. Returning to the portfolio concept, enterprise risk
managers should be focused on the business of effectively
managing risk and return. Within the portfolio, "return" is
relatively straightforward and easily understood. It has a
common, shared context. Expected return is the weighted sum
of the expected returns of the individual investments. Risk is
not so easily understood. Depending on the circumstances, the
policies may or may not appear to be "risky."

Why is ERM important?

Regulatory Developments

n Risk Management is not new. The concept has been around
in investment, banking, insurance, artificial intelligence, and
public policy processes, for example.

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