Marcel Melo- 5.2 Assignment- ERM Across Industries

docx

School

Embry-Riddle Aeronautical University *

*We aren’t endorsed by this school

Course

510

Subject

Management

Date

Apr 3, 2024

Type

docx

Pages

5

Uploaded by CaptainIce8722

Report
1 5.2 Assignment: ERM Across Industries Marcel Melo Embry-Riddle Aeronautical University HROM 510 – Enterprise Risk Management Professor Chris Mandel November 20, 2022
2 Segal references in the text that risk can be defined as “quantified through any deviation from expectations” (Segal, 2011). These risks will impact on the company value compared to the baseline the company initiated. Segal defines ERM as “the process by which companies identify, measure, manage, and disclose all key risks to increase value to stakeholders” (Segal, 2011). In week three’s reading of “The challenges of and solutions for implementing enterprise risk management” by Frasier and Simkins (2016), we learned about how ERM began to take root in the 1990’s and explored challenges that companies might face in order to come up with solutions dictated by ERM. While week five’s reading of “Enterprise risk management implementation in construction firms: An organizational change perspective” by Zhao & Pheng Low (2014), discusses two main things: the drivers and hindrances to ERM and organizational change theory, and certain strategies to strengthen those drivers and overcome those hindrances. In this paper we will take a look at the similarities and differences between week 3 and week 5’s readings to compare and contrast. In the article by Fraser and Simkins, they describe the history of ERM and how it started in the 1990’s and also discuss the importance of ERM for an organization. “The 1990s saw an increased emphasis on governance, risk, and control, with several important publications moving forward the concepts of governance and risk management” (Fraser & Simkins, 2016). Since there was no such thing as ERM back in the 1990’s, organizations had to be reactive to certain risk events instead of proactive. Risk management was not properly addressed and therefore organizations did not have a clearly defined risk appetite. The risks that organizations faced were primarily managed by insurance policies for things like property damage and healthcare. There was some thought for financial risk of course, but only financial risk with regard to comedies,
3 interest rates, and such. With ERM emerging in the 1990’s the need for ERM became apparent to manage all risks. With the emergence of ERM came a number of concepts, additional drivers, rating agencies, and framework, which put the credibility of the ERM concept at risk. According to the article, the credibility of ERM was bolstered by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) when they developed their own framework for ERM in 2004 (Fraser & Simkins, 2016). In comparison, the article by Zhao & Pheng Low also mentions the Committee of Sponsoring Organizations of the Treadway Commission and references their definition of ERM as ““a process, effected by an 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 its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives” (COSO, 2004, p. 2)” (Zhao & Pheng Low, 2014). Both articles discuss how ERM has been adopted because of requirements from laws or regulations. Some of the issues addressed in the Zhao & Pheng Low (2014) article, was that a good ERM program requires a lot of resources (money, people, time, data, skills, metrics, etc). While may of the hindrances listed in the article can be attributed to a lack of proper resources. Organizations should strive to implement a successful ERM program by funding a successful program, collecting quality data, creating a proper ERM process, and policies amongst other things. Both articles touch on the importance of a well run ERM program and also the things that can hinder the process. Fraser & Simkins discusses the importance of ERM policy starting from the top downward, and Zhao & Pheng Low focuses on the importance of having
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
  • Access to all documents
  • Unlimited textbook solutions
  • 24/7 expert homework help
4 sufficient resources to include financial, communication, and data collection. These certain “hindrances” to a successful ERM program are different in both articles but similar in the fact that it is constantly evolving and needs to be fluid in order to be successful. This risk is evaluated differently but treated the same. Internal organizational culture plays a big role in the effectiveness of an ERM program. Thus, it is important for all employees to buy-in on the implementation of the ERM process to gain the most benefit.
5 REFERENCES: Fraser, J. R., & Simkins, B. J. (2016). The challenges of and solutions for Implementing Enterprise Risk Management. Business Horizons, 59 (6), 689-698. doi:10.1016/j.bushor.2016.06.007 Segal, S. (2011). Corporate value of enterprise risk management : The next step in business management . John Wiley & Sons, Incorporated. Zhao, X., Hwang, B., & Pheng Low, S. (2014). Enterprise risk management implementation in construction firms: An organizational change perspective. Management Decision, 52 (5), 814-833. doi:https://doi.org/10.1108/MD-02-2014-0082

Related Documents

Case Analysis #1 .docx
Case Analysis #2.docx
BUS223 Case Analysis.pdf
ADM 620 Topic 7 DQ 2.docx
ADM 620 Topic 7 DQ 1.docx
Marcel Melo 1.5 Assignment- Preparing for Uncertainty.docx
6.2 Discussion- Country Risk.docx
Marcel Melo- 3.3 Assignment- ERM Challenges.docx
Cedeno, Koerner, Melo, Vining- 7.3 Group Project- Swissgrid Deliverable 4.docx
2.2 - Discussion- The Quest for Resilience.docx
Agile Perspective Post-Discussion Story (Yashkirti-1147695).docx
Managerial Accounting Case study - Group 7.docx
Recommended textbooks for you
Text book image
Purchasing and Supply Chain Management
Operations Management
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Cengage Learning
Text book image
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,
SEE MORE TEXTBOOKS
Recommended textbooks for you
Text book image
Purchasing and Supply Chain Management
Operations Management
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Cengage Learning
Text book image
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,
SEE MORE TEXTBOOKS