Risky business Risk management is nothing new. Corporations have long mobilized insurance experts, legal counsel, and public relations pros to help minimize and manage risk. But today's connected business environment creates complex risk scenarios that can't be handled by traditional risk management programs. Yet, far too many boards are still operating under the old assumption that buying insurance to cover physical assets is all that's required. For example, globalization creates new cross-border risks, such as currency fluctuations or changes in regulations.
Electronic commerce raises a whole host of security and privacy issues.
Also, too many companies' risk management programs are narrow, stand-alone efforts that are not linked to overall corporate strategy. For example, every Fortune 500 company certainly has legal, security, and internal audit functions. Yet all three of these important risk management functions usually act independently of one another. Understanding the enterprise risk environment of a company and its competitors allows the proactive board to define the opportunity landscape to maximize and sustain growth and profitability. ERM is a comprehensive approach to managing risks across an entire organization.