Enterprise Risk Management
Enterprise Risk Management (ERM) is a process for identifying and prioritizing critical risks facing an organization, quantifying their impact on financial and strategic objectives, and implementing financial and organizational solutions to address them. New and larger risks, new risk financing and hedging techniques, and increased management accountability have produced an emerging need for the broad approach of ERM. Whereas traditional risk management had been traditionally applied in silos, ERM focuses on a holistic view of risk, considering hazard, financial, operational, and strategic risk in combination, in the interest of optimizing shareholder value.
Over the last decade, insurers have increasingly been embracing ERM practices. With this has come a move to develop more sophisticated models for quantifying a company’s key risks.