What is Enterprise Risk Management?

Enterprise risk management (ERM) is a plan-based, enterprise approach to identifying and mitigating risks. ERM systems are tailored to a specific industry. The commonality, however, is that it involves identifying and developing a plan of action for avoiding or dealing with said risks.

How does Enterprise Risk Management Work?

ERM is common to various industries, including finance, banking, manufacturing, services, energy, etc. Project managers and other experts work with ERM awareness to assess the risk relevant to their groups or industries; prioritize those risks; and make knowledgeable decisions on how to deal with them. The risk control plans they devise estimate the effect of various risks and outline possible responses. For instance, the Environmental Protection Agency requires facilities to properly address potential risks and develop plans for what they will do if an incident occurs. Groups that efficiently control their risks also adopt recurring practices to control the potential risks that they have mitigated. In many situations, new positions and designations are created and assigned for this purpose. In developing ERM tasks, agencies must look to both negative and positive risks.