creating value through strongenterprisestrong risk management.pdfVIP

Creating Value through Enterprise Risk Management Frantz Maurer Bordeaux Business School, Department Organization, Control Management Domaine de Raba – 680, cours de la Libération, 33405 Talence cedex – France frantz.maurer@bordeaux-bs.fr Abstract. The traditional risk management approach has been characterized as a highly disaggregated method of managing financial risks. Recently, risk management has evolved from a narrow, insurance based view to a hol istic; all risk encompassing view, commonly termed Enterprise Risk Management (ERM). Financial risks are inherent in financial markets and their management represents one of the main tasks in the business of financial institutions. Enterprise Risk Management enables management to effectively deal with uncertainty and associated risk and opportunity, enhancing the capacity to build value. In contrast to the existing finance literature, this paper emphasizes the practic al issues related to the adoption of an ERM framework for strategic decision-making in banks. The aim is to provide an extensive guide to the implementation issues faced by banks that are in the process of implementing fully integrated risk management systems and capabilities. Introduction − The emergence of Enterprise Risk Management in banks In the recent years, banks the world over are reevaluating how they address risk. High- profile financial failures over the past decade and an accompanying wave of new regulations − such as Basel II, International Financial Reporting Standards (IFRS) and Sarbanes-Oxley − are driving banks to take a more comprehensive approach to risk management. The increasing so