Beyond having sufficient insurance against fire, theft or flooding, the senior management of an organisation face challenges in integrating risk management effectively into the business. Significant challenges are also faced in demonstrating to key stakeholders how management monitor the myriad risks to the organisation and the effectiveness of controls designed to mitigate them.
An enterprise risk management (ERM) framework may be needed to ensure the achievement of these objectives. The Committee of Sponsoring Organisations (COSO) defines an ERM framework as:
“… a process, effected by the entity’s 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 risk to be within the risk appetite, to provide reasonable assurance regarding the achievement of objectives."
Embedding a suitable and proportionate ERM framework has the following advantages:
- Provides an early warning system for threats to the achievement of strategic and operational objectives, enabling a proactive rather than reactive approach to risk management.
- Facilitates a more risk-focussed organisational culture.
- Encourages greater risk awareness and communication throughout an organisation.
- Creates links between different areas of risk to facilitate robust monitoring thereof.
- Produces valuable management information to be used for decision-making purposes.
- Establishes a standardised methodology for monitoring and reporting on identified risks.
- Can create synergies and other organisational efficiencies, thus adding real tangible value.
- Demonstrates sound risk-related governance to shareholders and other stakeholders alike.
- Compliance with laws and regulations.
Whether your risk management function is in-house or outsourced, and whether you are UK-based or operating internationally, Mazars’ expertise and pragmatic approach can add real value by helping you to optimise your management of risk.
Please contact Sam or Matt if you require any further information on the risk management services we provide.