ENTERPRISE RISK

MANAGEMENT

By Group 4
BY GROUP 4 MEMBERS
1. AJIBOYE AYOMIPOSI S. - IFS/18/5929
2. OMOTOSHO OLAMILEKAN M. - IFS/18/5959
3. OLAWALE MARVELOUS OLAKITAN - IFS/18/5953
4. TITILAYO AYODEJI EMMANUEL - IFS/18/5966
5. ADEOYE OLUWATOBA ADEAYO - IFS/18/5924
6. OGINNI JOSEPH OLUMUYIWA - IFS/18/5948
7. FASANYA KEHINDE - IFS/18/5943
8. OGUNLEKE ADEYEMO - IFS/17/2364
 Introduction to ERM
Enterprise Risk Management (ERM) serves as the compass that guides
organizations through the turbulent waters of uncertainty and potential pitfalls.
As we delve into the depths of ERM, we'll touch upon several key subtopics that
enrich our understanding:

- Risk Identification

- Risk Assessment and Analysis

- Risk Mitigation and Control

- Integration of ERM into Business Strategy

- ERM and Corporate Governance

- ERM in Different Industry Sectors

- Emerging Trends in ERM

RISK
IDENTIFICATION
 RISK IDENTIFICATION
Risk identification is the process of identifying and defining potential risks that could impact the successful
completion of a project, program, or any other endeavor. Risk identification is also the process of identifying
potential risks, including their sources and causes, where they may impact the organization, and the potential
consequences.

Examples can include:

● Strategic planning
● Business function
● Project
● Process
● Activity
 RISK IDENTIFICATION
RISK IDENTIFICATION PROCESS

The risk identification process defines the scope of a project or program.

● Identifying Potential Risks

● Assessing the Likelihood and Impact

● Prioritizing Risks

● Developing Risk Mitigation Plans

● Continuously Monitoring and Updating

 RISK IDENTIFICATION
RISK IDENTIFICATION TECHNIQUES

There are several techniques that organizations can use to identify risks. They are the following –

● Brainstorming:

● Root Cause Analysis

● SWOT Analysis

● Expert Judgment
RISK ASSESSMENT
AND ANALYSIS
Risk Assessment and Analysis
Risk assessment and analysis are crucial components of Enterprise Risk Management (ERM), a strategic approach
that organizations use to identify, evaluate, and manage various types of risks that could affect their objectives,
operations, and overall performance. They are integral parts of this process and involve several key steps:

● Risk Identification

● Risk Evaluation

● Risk Analysis

● Risk Assessment

● Risk Mitigation Planning

RISK MITIGATION
AND CONTROL
 RISK MITIGATION AND CONTROL

❏ Risk mitigation: This involves implementing measures to reduce the likelihood of risk
occurrence or minimizing its impact. Some commonly employed strategies are Risk
Reduction and Risk Avoidance.

❏ Control Implementation: Control implementation refers to the establishment and

enforcement of policies, procedures, and safeguards to manage risks effectively. Some key
considerations for control implementation are Internal control and compliance measures.
INTEGRATION OF ERM
INTO BUSINESS
STRATEGY
Integration of ERM into Business Strategy
ERM integration aligns risk considerations with organizational objectives
ERM integration involves:

● Cultivating risk awareness among senior leadership

● Establishing clear objectives

● Conducting comprehensive risk assessments

● Communicating regularly and transparently with stakeholders

● Monitoring risks and adapting mitigation strategies

● Creating a feedback loop between ERM and business strategy

● Training and educating employees on risk awareness

● Aligning incentives and accountability with risk management

● Leveraging technology and analytics to enhance ERM capabilities

ERM integration enables proactive risk management and informed decision-making
ERM AND CORPORATE
GOVERNANCE
The Relevance of Governance in Enterprise Risk Management (ERM)
Enterprise Risk Management (ERM)'s financial viability and long-term
sustainability are significantly influenced by corporate governance. The trust of
an organization’s stakeholders is jeopardized by insufficient procedures and
practices.

The influence of corporate governance on ERM is evident from multiple

vantage point:

1. Management and Oversight

2. Ethical Decision Making
3. Integrity in Financial Reporting
4. Risk identification and Management
5. Subcontractor Management
6. Data Security
ERM IN DIFFERENT
INDUSTRY SECTORS
ERM IN DIFFERENT INDUSTRY SECTORS

Finance & manufacturing are sectors that manage their risks with ERM.

A. FINANCE SECTOR : THE RISKS

Financial institutions face a number of risks. They include::

● Financial risks: From volatility in financial markets, interest rates, and commodity prices.

● Operational risks: From internal processes, systems, and people.

● Event risks: From external events eg. natural disasters, political instability & cyber attacks.

● Compliance risks: From failure to comply with laws and regulations.

ERM IN DIFFERENT INDUSTRY SECTORS

A. FINANCE SECTOR

HOW ERM IS APPLIED IN FINANCE:

● A bank uses ERM to identify and assess the risks associated with lending to a particular borrower.
● A hedge fund uses ERM to manage the risks associated with its trading strategies.
● An insurance company uses ERM to assess the risks associated with its policies.
● A pension fund uses ERM to manage the risks associated with its investments.

THE BENEFITS OF EFFECTIVE ERM IN FINANCE ARE:

● Improved risk identification and assessment.
● More effective risk mitigation strategies.
● Reduced risk of financial losses.
ERM IN DIFFERENT INDUSTRY SECTORS

B. MANUFACTURING SECTOR : THE RISKS

Manufacturing Firms face a number of risks, some of them are:

● Financial risks: Fluctuations in currency exchange rates, interest rates, or commodity prices. They

can also include risks associated with financial fraud or mismanagement.

● Operational risks: From accidents, equipment failures, product recalls, or supply chain disruptions.

● Regulatory risks: Non-compliance with government regulations, which can lead to fines, penalties, or

even criminal charges.

ERM IN DIFFERENT INDUSTRY SECTORS

B. MANUFACTURING SECTOR
HOW ERM IS APPLIED IN THE MANUFACTURING SECTOR

● Toyota: uses ERM to identify and assess how natural disasters, product recalls, and supply chain
disruptions can affect its operations.
● General Electric: uses ERM to identify and assess how currency fluctuations, interest rates, and
commodity prices can affect their financial performance.

RESULTS OF EFFECTIVE ERM IN MANUFACTURING :

● Improved financial performance: Effective ERM helps to reduce costs and avoid losses,
● Increased operational efficiency: ERM helps manufacturers mitigate risks, improve their
operational efficiency and reduce downtime.
● Enhanced compliance: ERM helps manufacturers avoid fines and penalties, by ensuring that the
company is in compliance with regulations.
EMERGING TRENDS
IN ERM
 Emerging Trends in Enterprise Risk Management
As the business landscape continues to evolve, several emerging trends are shaping the way organizations approach
ERM:

● Integration of Technology and Data Analytics

● Cybersecurity Risk Management

● Climate Change and Environmental Risks

● Supply Chain Resilience

● Regulatory and Compliance Complexity

● Social and Reputational Risks

● Remote Work and Digital Transformation

 Conclusion

As we conclude, remember that ERM is not merely a

theoretical construct but a practical imperative. It equips
organizations with the foresight and tools needed to thrive
amid uncertainties.

THANK YOU