Management of risk, traditionally, has been the sole focus and responsibility of the department that owns the risk or is directly impacted by it. The purchasing department managed supply chain risk while credit risk was on the shoulders on the credit department and committee. Treasury department managed liquidity risk and so on; risks were managed independently.

Enterprise Risk Management (ERM) describes a process by which an organisation can manage risk in a wholistic and integrated way. This wholistic process identifies, assesses, manages and monitors risk from all sources for the purpose of ensuring that the organization meets its short and long-term strategic objectives as well as continue to create value for its stakeholders.

So basically, ERM is asking the question: Given the objectives of the organization as a whole and the nature of its operations and branches, what are the events that could impact the achievement of its goals both negatively and positively? Thereby, ensuring the long-term sustainability of its existence and profitability of operations.

Read Why Organisations Need ERM.