Enterprise Risk Management Flashcards
Mission
Why the company exists & what it hopes to accomplish
Vision
What it hopes to achieve over time
Core Values
How to achieve goals - Ethics, Culture, What is good or bad
Value Creation
The successful & profitable launch of a new product line by an entity
Value Preservation
A company’s ability to maintain market share with high customer satisfaction & Sustained profitability
Value Erosion
The unsuccessful launch of a new product
Governance & Culture
D.O.V.E.S
Desired Culture
Oversight of the Board
Values
Attracts capable Employees
Establishes Operating Structure
Strategy & Objective
S.O.A.R
Strategies
Formulates Business Objectives
Analyzes Business Context
Risk Appetite
Performance
V.A.P.I.R
Views
Assesses Risk Severity
Prioritize Risk
Identifies Risk
Implements Risk Responses
Review & Revision
S.I.R
Accesses Substantial Change
Pursues Improvement in ERM
Reviews risk & Performance
Information, Communication & Reporting (OnGoing)
T.I.P
Leverages Information & Technology
Communicates Risk Information
Reports on Risk, Culture & Performance
Board of Directors
Responsible for oversight of Management by assessing work & holding them accountable
Management
Responsible for developing & implementing the ERM framework and process
4 Methods of Responding to Risk
Avoidance: Discontinuing, Replacing
Reduction: Relocating, Diversifying
Sharing: Purchasing Insurance
Acceptance: Doing nothing
Inherit Risk
Risk to an entity in the absence of any direct of focused action by management to alter its severity
Residual Risk
What remains after action has been taken by management to reduce inherit risk
Risk Apettite
Negative events exceeding residual risk.
