Management Control Systems : Enterprise Risk Management

Enterprise Risk Management (ERM) is a series of processes used to identify risk, implement strategies to address risk, and monitor impact on the organization. Indeed, an effective ERM will consist of a corporate profile, which is a record of key risks that would hinder the organization in achieving their key objectives (Fraser & Simkins, 2010). Ideally, the risk profile is created as a tool to communicate with the Board of Directors, but may be used as a means of communication with all levels of management (Bethel, 2016). Typically, there are variations of the risk profile based upon the level of management, such as duration, types of risk, and purpose (Fraser & Simkins, 2010).

The ability to understand and quantify risk, is of the utmost importance. This is something that can be used to define the precise ways that risk should have the ability to be managed, and the precise way that risk should be dealt with on a macro level. It is important to understand that risk management is an excellent medium in which risk could be mitigated. This is an important variable that must be understood in this case, as there are many potential risk areas that the firm must deal with. By taking on a macro integrated approach, the ability to understand with and better deal with risk will continue to be present.

Identify the potential risks which affect the company and manage these risks within its risk appetite;

A holistic view of risks is crucial for business profitability and this can be achieved through a process of frequent evaluation, training, monitoring and feedback sessions with key stakeholders (Chugh, 2016). This approach provides a framework for understanding the patterns and trends of potential risks and how they relate to the industry. A successful business should have efficient procedures, which include management and financial reporting systems. There many examples of organizations which have successfully managed their risks and turned the opportunities into concrete returns for the shareholders.

Because of rapid economic growth in XXX over the past years has increased the fear of major business failure, risk has become an overwhelmingly dominant business topic. As a result, top managers are now focusing on risk management in their companies. As each business entity struggles with its own set of needs and circumstances, the need and flexibility to address this continuously changing and volatile economic environment, would be extremely challenging and fulfilling to me.

business: Managing risk in a complex and connected world. Revue Management & Avenir, (74), 159-173. Retrieved from Business Source Complete Database.

The impact of the risks on global business it is dramatic in our days, changing the entire look of the industries and financial services. Some risks could be anticipated and identified but some could not. Companies now are using more and more key steps and principles to better manage the risks by;

Kallman observes that risk management is decision making process that combines a number of processes in the business operations (Kallman, 2005). Risk management involves; organizing, planning, controlling, leading and allocating resources. The technique by Kallman is seen as one that leverages the risk manager to have the foresight on to the target path in operations. It offers a guide to the organization in achieving its goals by minimizing derailing obstacles to an organization's success path.

Integrating risk management (RM) and management control together has been considered as a significantly essential approach to bring about high quality of RM. This idea has been developed since the Committee of Sponsoring Organizations of the Treadway Commission (COSO) published integrated framework for internal control in 1992. Ten yeas later, Section 404 compliance, which is part of Sarbanses-Oxley Act, was enacted in 2002 for the purpose of reviewing and reporting on effectiveness of internal control. In 2004, COSO also released Enterprise Risk Management (ERM), which is a framework to realize establishment of internal control and compliance with Section 404.

It is why risk management has assumed a higher significance as well as greater importance than it had some years ago. (Butcher, 2011) This change is mainly driven by the instability and convolution of the marketplace. Moreover, the risks to which companies are exposed and their severity also keeps growing. Companies are now also moving towards appointing a Chief Risk Officer. In many companies, this responsibility is assigned to the CEO.

Managing risk is a complex issue in the world of business today, and covers issues from budgets, to legal issues as well as security for a company, and these are topics that will be discussed in this study. Often the success of a company depends on the risk management skills of the team and leaders. How well risk management in business is handled will decide whether the mission of the company will be carried out and it is primary to security. This study will look at issues that are affected by risk management and draw conclusion on how they should be used in order for a company to reach optimal success.

This essay will explore three areas of risk management which have been criticised in recent years due to their earlier neglect. Following the description of the problem and the current status of risk management research in each given area, a brief conclusion is provided. The conclusions in this essay aim to address the issues in risk management more generally by building on the status of risk management studies.

Managing risk is essential to an organization’s victory. Even the largest corporations cannot control the economic and competitive environment around them. Planning encourages the development of

In recent years, life has become a lot more complicated. Today firms are confronted with business risks that are

Risk is the chance that the actual return from an investment may differ from what is expected. (Hickman, K. A., Byrd, J. W., & McPherson, M. 2013) Risk management discipline has evolved and expanded over the years and has shifted the focus from financial risks to a broader perspective with strategic risks. (Bugalia, J., & Kallman, J. 2012) Risk management involves; organizing, planning, controlling, leading and allocating resources and make decision for the organization for a success path. To achieve this component in running of a business, measures have been devised to identify and analyzed the uncertainties associated. This paper discusses the techniques devised by Dr. James Kallman, in comparison to those of other risk management experts.