Written by Content Team | Published on April 8, 2022
Table of contents:
Every decision we make involves some sort of risk. People take a risk every time they cross a busy street without waiting for the light to turn green, when they lift a heavy piece of furniture, or when they make an investment decision.
But how do we define an enterprise-level risk?
In this article, we will examine the nature and implications of enterprise risk for modern organizations. We’ll describe the underlying goals and objectives of enterprise risk management (ERM), explore some ways your organization can benefit from it, and consider the steps you can take to implement it.
We will also look into how an automated software escrow solution can not only help you minimize enterprise risk, but also improve your processes and cut back on costs.
So let’s get into it!
What is Enterprise Risk?
All organizations have to manage risks in order to stay in business. Most business leaders would say that managing risk is just a normal part of running a business. So if risk management is already on the agenda in these organizations, what’s the point of ERM (enterprise risk management) as a standalone business unit or initiative?
The traditional approach to risk management.
This approach is often referred to as silo or stove-pipe risk management whereby each silo leader is responsible for managing or elevating risks within their respective silo.
Limitations of the traditional approach to risk management.
Another limitation is that risks don’t follow your business’ organizational chart and, as a result, there may be risks that “fall between the silos”. In other words, in case there’s ever a risk that does not capture the attention of any of the silo leaders, this risk will go unnoticed until it triggers a catastrophic risk event. Needless to say, this is not a great risk management strategy.