Risk Management Practices As Part Of Their Credit Rating Analysis Essay

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).

Among the outgrowths in the United States is the Sarbanes-Oxley Act of 2002, and similar legislation has been enacted or is being considered in other countries. This law extends the long-standing requirement for public companies to maintain systems of internal control, requiring management to certify and the independent auditor to attest to the effectiveness of those systems. Internal Control – Integrated Framework, which continues to stand the test of time, serves as the broadly accepted standard for satisfying those reporting requirements. This Enterprise Risk Management – Integrated Framework expands on internal control, providing a more robust and extensive focus on the broader subject of enterprise risk management. While it is not intended to and does not replace the internal control framework, but rather incorporates the internal control framework within it, companies may decide to look to this enterprise risk management framework both to satisfy their internal control needs and to move toward a fuller risk management process. Among the most critical challenges for managements is determining how much risk the entity is prepared to and does accept as it strives to create value. This report will better enable them to meet this challenge.

Enterprise risk management is a technique used by organizations to manage risks that have the potential to affect the company, both positively and negatively, altering

Risk management is a process for identifying, assessing and prioritizing risks of different kinds. Once the risks are identified, the risk manager will create a plan to minimize or eliminate the impact of negative events. A variety of strategies is available, depending on the type of risk and the type of business. There are a number of risk management standards including those developed by the Project Management Institute the International Organization for Standardization the National Institute of Science and Technology and actuarial societies. Organizations uses different strategies in proper management of future events such as risk assumption, risk avoidance,

Enterprise risk management is always the decision of the organization making a process to identify and manage uncertainties of the organization. It is just like the traditional risk management program, except the Enterprise risk management professionally looks to create value and eliminate risks in the organizations.

Enterprise risk management is an approach to assist management to identify and manage uncertainties to obtain positive risk objectives. The ERM framework focuses on the development of a strategy that contains the importance of a risk and internal control

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;

Today’s risk management environment is more dynamic than ever. More often, companies are embracing risk management’s undeniable opportunity to improve business results. The emergence of this “true business partner” relationship requires that risk management decisions and processes rely more on strategic planning, rigorous analytical processes, and collaborative internal and external partnerships. Knowing which actions and relationships will drive down your costs of risk demands a deep and comprehensive understanding of the factors that influence it.

The business environment is constantly changing; it is unpredictable, extremely volatile and complex. This makes businesses exposed to risk because of the nature of the environment. It is therefore important for businesses to make strategic decisions on how to either reduce or make the effect of the risk less severe as much as possible. Businesses have to identify and manage their risks to ensure their success and continuation. According to the Committee of Sponsoring Organizations of the Treadway Commission (COSO), “Uncertainties present both risks and opportunities, with potential to erode or enhance value. Risk management is an increasingly important business driver and stakeholders have become much more concerned about risk. The 2008–2009 global financial crisis and the rapidly deteriorating global economy has created a context in which companies now face risks that are more complex, more interconnected, and potentially more devastating than ever before. Failure to adequately acknowledge and effectively manage risks associated with decisions being made throughout the organization can and often do lead to potentially catastrophic results. Risk may be a driver of strategic decisions, it may be a cause of uncertainty in the organization or it may simply be embedded in the activities of the organization. A good Risk Management program means that the company is able, first of all to identify, then to measure risks, to project, to set limits and to keep losses

Today 's business world is continually changing—it 's flighty, unstable, and appears to become more complex each day. By it’s extremely nature, it is full of risk. Generally, organizations have seen risk as a necessary evil that should be minimized at whenever possible. Lately, expanded regulatory requirements have constrained organizations to expend significant assets to address risk, and shareholders in turn have started to investigate whether organizations had the right controls set up. The expanded interest for straightforwardness around risk has not generally been met or met in an opportune way, be that as it may—as prove by the financial market emergency, where the low quality of basic resources significantly affected the

Risk management is the term applied to a logical and systematic method of establishing the context, identifying, analyzing, evaluating, treating, monitoring and communicating risks associated with any activity, function or process in a way that will enable organizations to minimize losses and maximize opportunities. (Lecture notes)Risk Management is also described as 'all the things you need to do to make the future sufficiently certain'. (The NZ Society for Risk Management, 2001)

Enterprise Risk Management is defined as “the process of identifying and analyzing risk from an integrated, company-wide perspective. It is a structured and disciplined approach in aligning strategy, processes, people, technology and knowledge with a purpose of evaluating and managing the uncertainties the enterprise faces as it creates value” (Woon, Azizan, & Samad, 2011, p. 23).

Too much risk can result in critical failure of the business and too little risk can reduce competitiveness. Risk is the effect of uncertainty on objectives which have both positive and negative effects. According to the ISO/IEC Guide 73, risks are the combination of the probability of an event and its consequences which have the potential for benefits (upside) if managed effectively, or the threat of success (downside) as a result of poor assessment and management. Risks are a central part of any organisation’s strategic management; it is suggested that the greater the risk involved, the higher the return. However, this can only be managed by effective identification and treatment of all perceivable risks. Risk management is a process that is supported by a set of principles and structures that are appropriate to the organisation and its external environment and requires a balance between the level of the risk in relation to the size, nature and complexity of the organisation.

There is no organisation that is not faced with risks because every company has its own unexpected negative outcomes. According to Hopkin (2012, xviii) risk is everywhere and derives directly from unpredictability. The process of identifying, assessing and managing risk brings any business full circle back to its strategic objective for it will be clear that not everything can be controlled. Risk management involves a healthy dose of both common sense and strategic awareness coupled with an intimate knowledge of

One well accepted description of risk management is the following: risk management is a systematic approach to setting the best course of action under uncertainty by identifying, assessing, understanding, acting on and communicating risk issues. In order to apply risk management effectively, it is vital that a risk management culture be developed. The risk management culture supports the overall vision, mission and objectives of an organization. Limits and boundaries are established and communicated concerning what are acceptable risk practices and outcomes. Since risk management is directed at uncertainty related to future events and outcomes, it is