16-oct-2015

Furbi & Friends

Introduction.
In first instance this chapter is focused on introducing the concept of Enterprise Risk
Management (ERM) and describe how it works, why is important and how enterprises
used for growth. On the other hand, this chapter aims to make a distinction between
Risk Management and Enterprise Risk Management.
Another important fact on this chapter is the concept of COSO (Committee of
Sponsoring Organizations), it refers to reasonable assurance.
ERM is a process follow by an entity designed to identify potential events that may
affect the firm, it also manage risk to provide reasonable assurance regarding the
achievement of entity objects.
ERM is important for different reasons, some of them are:
1- ERM assist management with improving the consistency of operating
performance by increasing the emphasis on reducing earrings volatility.
2- Management will be able to articulate more effectively how well they are
handling existing risk.
3- Understand risk with the entities opportunity seeking behaviour.
4- Successful respond to a changing business environment.
5- Open a positive culture with respect to risk and risk management also create
centralize policy settings and create discipline and control.
ERM is focus on the application of risk management, combining tangible and
intangible and intangible assets comprising the organization business model.
Its focused:
1.
2.
3.
4.

Physical Assets
Customers Assets
Financial Assets
Employee Assets

How does it protect and enhance enterprise value.

Improve Business Performance

Optimize Risk Management Cost
Establish Competitive Advantage

In conclusion, traditional risk management model is focused on managing on

certainties around physical and financial assets in contrast ERM is focused on
enterprise entire assets portfolio, including intangible assets such as its customers
assets, employee and suppliers assets.