Page 83 - RISK Management IC86 Ebook

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Rather than controlling risk from a canned prescription,
a company's management team must design ERM around
a set of guiding principles. The company's mindset
toward ERM determines the efficacy of the risk
management.

n With an ERM infrastructure in place, line management
can be relied on to perform the initial risk analysis.
Competent managers, already experts in their unit's role
within the company, can fold risk controls into business
decisions to protect the company from inappropriate risk
exposure.

n As an RM expert serving at the executive level, the Chief Risk
Officer (CRO) establishes a channel for two-way
communication throughout the organization. Responsibility for
RM must be independent of risk-taking functions to prevent
conflicts of interest. The role of oversight for RM must be
clearly documented, and relationships between compliance,
internal audit and management functions should be
unambiguous.

Other ways that ERM can contribute to value creation

n Enterprises want to optimize capital and reduce exposure to
risk. This is when ERM is an extremely valuable tool. All

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