ApplyingCOSO’sEnterpriseRiskManagement—.pptVIP

Applying COSO’sEnterprise Risk Management — Integrated Framework Today’s organizations are concerned about: Risk Management Governance Control Assurance (and Consulting) ERM Defined: “… a process, effected by an entitys board of directors, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risks to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives.” Source: COSO Enterprise Risk Management – Integrated Framework. 2004. COSO. Why ERM Is Important Underlying principles: Every entity, whether for-profit or not, exists to realize value for its stakeholders. Value is created, preserved, or eroded by management decisions in all activities, from setting strategy to operating the enterprise day-to-day. Why ERM Is Important ERM supports value creation by enabling management to: Deal effectively with potential future events that create uncertainty. Respond in a manner that reduces the likelihood of downside outcomes and increases the upside. Enterprise Risk Management — Integrated Framework This COSO ERM framework defines essential components, suggests a common language, and provides clear direction and guidance for enterprise risk management. The ERM Framework Entity objectives can be viewed in the context of four categories: Strategic Operations Reporting Compliance The ERM Framework ERM considers activities at all levels of the organization: Enterprise-level Division or subsidiary Business unit processes The ERM Framework Enterprise risk management requires an entity to take a portfolio view of risk. The ERM Framework Management considers how individual risks interrelate. Management develops a portfolio view from two perspectives: - Business unit level - Entity level The ERM Framework The eight components of the framework are interrelated … Internal Environment Establishes a philo