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Thought Leadership in ERM | COSO’s 2010 Report on ERM | 7

overly prescriptive, with about one-third saying “Not at All” or great deal of disagreement with the statements asserting the
“Minimal” in contrast to 27.4 percent perceiving that concern framework might be overly vague or not widely accepted. See
to be “Significant” or “A Great Deal.” There was clearly a table below reflecting the full results:

Percentages
Perceptions Related to Potential “not at All “Moderate” “Significant or
Criticisms of COSO’s ERM Framework or Minimal” A Great Deal”

Provides an overly theoretical approach to ERM 23.5% 31.9% 44.6%
Provides an overly prescriptive framework for ERM 38.6% 34.0% 27.4%
Contains overly vague guidance 43.1% 30.4% 26.5%
Describes ERM in a way that is not widely accepted 58.7% 25.0% 16.3%

Reactions to the cube depiction of COSO’s ERM Framework complicated and causes negative reactions to COSO’s ERM
were mixed. The largest percentage of respondents (41% Framework. Most of the open-ended comments on the
for the full sample and 39.9 percent of the sub-sample of strengths and weaknesses of the cube depiction echoed
public companies) believed the cube depiction was a very the categories indicated above. Many wrote that it was too
effective portrayal of the inter-relationship of the elements complicated and particularly it was difficult to explain to
of ERM. However, 29.5% of all respondents said the cube members of the board of directors or other individuals who
COSO Cube Depiction
depiction was complicated just as ERM is complicated, and do not deal with ERM on a regular basis.
another 26.4% felt the cube depiction was unnecessarily

COSO Cube Depiction

50%
41.0%
40%
29.5%
30% 26.4%
20%

10%
3.1%
0%

E ective Portrayal Unnecessarily Complicated
Complicated like ERM Too simplistic

When asked about the extent to which COSO’s ERM Another important dimension upon which to evaluate COSO’s
Framework provided useful guidance to various individuals, ERM Framework is the extent to which it provides guidance
it was not surprising to find that survey respondents which can help organizations to achieve various benefits
believed that the framework provided the most guidance associated with having a robust ERM process. Respondents
to internal audit executive leaders, senior risk executives, indicated that COSO’s guidance was most helpful in aligning
and compliance or risk management leaders. Views of risk appetite and strategy and in identifying and managing
its usefulness to more senior executives and the board of multiple, cross-enterprise risks. There appears to be some
directors or audit committees were fairly positive as well. opportunities for COSO to provide more guidance to help
Respondents felt it was least useful to business unit leaders, organizations use their ERM efforts to improve deployment of
managers and staff. These findings held true for the subset of capital and to seize opportunities. See chart on the next page:
public companies only.

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