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The ERM Framework

The ERM Framework. Entity objectives can be viewed in the context of four categories: Strategic Operations Reporting Compliance. The ERM Framework. ERM considers activities at all levels of the organization: Enterprise-level Division or subsidiary Business unit processes .

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The ERM Framework

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  1. The ERM Framework Entity objectives can be viewed in the context of four categories: • Strategic • Operations • Reporting • Compliance

  2. The ERM Framework ERM considers activities at all levels of the organization: • Enterprise-level • Division or • subsidiary • Business unit • processes

  3. The ERM Framework The eight components of the framework are interrelated …

  4. Risk Analysis Risk Assessment Risk Management Risk Monitoring Identification Control It Process Level Measurement Share or Transfer It Activity Level Prioritization Diversify or Avoid It Entity Level Source: Business Risk Assessment. 1998 – The Institute of Internal Auditors

  5. Impact vs. Probability High Medium Risk High Risk I M P A C T Share Mitigate & Control Low Risk Medium Risk Accept Control Low PROBABILITY High

  6. Step 1 Step 2 Step 3 Step 4 Step 5 Establish Objectives Identify Risks & Controls Assess Risks & Controls Evaluate & Take Action Monitor & Report A Simple Framework Communicate, learn, improve

  7. Risk Management is critical to ALL levels of decisions The HM Treasury’s The Orange Book Decisions can be categorized into three types. The amount of risk (uncertainty) varies with the type of decisions. Most decisions are concerned with implementation.

  8. The relationship between IRM & MOHLTC’s Complex Risk Environment

  9. Risk rating …Combining impact and likelihood Slide 9

  10. Risk reporting and communications

  11. Key Risk Indicators (KRIs) are linked to strategy, performance and risk Strategy & objectives Risk Cause Consequence KRI Performance KRIs need to be linked to strategy, objectives and target performance levels, with a good understanding of the drivers to risk.

  12. Project Risk Integration Communication Scope Project Risk Cost Time Quality Procurement Human Resources

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