Enterprise Risk Management ( Erm ) - 1531 Words

In the changing scenario of business environment the main motive of managers has become to maximize the wealth of share holders who are owners of the company. To do this the managers have began to think about the Enterprise Risk Management (ERM). How much risk can be taken so that gain can be increase as risk is directly associated with gain Answer 1: Enterprise Risk Management (ERM) has great potential to provide organizations with new competitive advantages. Enterprise Risk Management (ERM) is designed and disciplined approach to deal with strategy, processes, people, technology and knowledge by the motive of evaluation of management of uncertainties which are faced by the enterprises and generates value. The early models of Enterprise†¦show more content†¦In addition by connecting Enterprise Risk Management (ERM) to strategy, risk process can be done in a view where business is headed, not totally based where it is today. This differentiation is important in an environment in which number of organizations is adopting different business models and strategies with increased speed, for example, augmenting of e-commerce, m-commerce, distance learning and globalization of business, etc. Going through this process, the managers of an organization may find that they are not sure about hunger (appetite) of actual risk. By developing Enterprise Risk Management (ERM) model for evaluation of level of risk the enterprise can establish how it can adjust of its risk appetite on the basis of outcomes and assessments. Connection of business strategy to Enterprise Risk Management (ERM) may provide help for setting level for risk appetite and measurement of risk so they are linked in long term view of business entity. If not so appetite and related measures will be established in appropriate way, the decision makers may take such decisions which deals higher or lower risk than the ideal strategy. Answer 2: Every human creation consists of strengths and weaknesses or merits and limitations. Therefore, the Enterprise Risk Management (ERM) is not unaffected with the limitations. Following are limitations of Enterprise Risk Management (ERM): a) The first weakness of