Page 85 - RISK Management IC86 Ebook

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Organizational objectives for pursuing erm

1. Competitive advantage
n For organizations that are in the business of taking risks, risk

management plays a crucial role in the success and survival
of the organizations. Enterprise Risk Management, treats all
risks as a combined portfolio and manages them holistically.

2. Strategic goals
n In order to succeed, organizations need to set business

strategies, both offensive and defensive. Sometimes being a
market pioneer and taking on specific risks might pave the
way to become the market leader.

3. Shareholder value
n ERM can help an organization achieve its business objectives

and maximize shareholder value. Companies that undertake a
risk-based program for shareholder value management
typically can add 20- to 30-percent or more to shareholder
value.

4. Transparency of management (reduction of agency costs)
- ERM involves

n setting risk appetite and policy,

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