Enterprise Risk Management (ERM) is higher end extension of Traditional Risk Management, for setting up the risk-strategy and risk-directives across the organization that involves managing all of the risks affecting an organization’s ability to meet its goals and high level objectives. Above of them are internal control and fraud deterrence, to increase the organization’s short and long term value and trust to its stakeholders. It’s a front-facing roles that contribute directly to the bottom line.
ERM is an important because its success determines the health and life of the business enterprise; it’s an approach of identifying potential events, plan responses and controlling the activities that may do good or bad to organization. The goal is to minimize the impact of negative risks and to maximize the impact of opportunities.
Risk Management is an overall process to manage risks through specific prevention and control measures incorporated into company processes. But this is not for the organizations where departments work in silo and don’t want to share information and knowledge with other departments or individuals. Its critical for the business, without it, a firm cannot possibly define its objectives for the future.