Enterprise Risk Management Training - Buzzword Bingo!
March 10th, 2009In the risk management world, sometimes called enterprise risk management (ERM), you’ll find yourself experiencing a whole new vocabulary with respect to the world of risk management.
If you’re looking for an ERM reference of the concepts you have previously used or if you’re a risk expert in the making, you will see elements of enterprise risk management in the concepts listed below.
Risk Management Activities
You may have been part of:
- An acquisition review,Â
- A due diligence review,
- Contingency planning,
- An operational assessment,
- A facilitated upper-management meeting,
- A merger and acquisition review, or
- Risk management.
Consider the following your Business Dictionary for readily defining these concepts, even if you’re new to the ERM world:
ERM Nomenclature
Acquisition planning coordinates activities of the personnel involved in the purchase of a supply or asset to make sure acquisition goes smoothly, on schedule, quickly, and in a cost-effective manner.Â
Contingency planning is undertaken to ensure that immediate and effective risk management efforts will be undertaken by leadership and teams in the case of an emergency. The fundamental objectives of contingency planning are to ensure:
- containment of damage or injury to, or loss of, personnel and property, and
- continuity of the key operations of the organization.Â
Due diligence is a measure of prudence, responsibility, and diligence that is expected from, and ordinarily exercised by, a reasonable and prudent person under the circumstances.Â
An Operational assessment evaluates the suitability and effectiveness of a system through a process intended to:
- identify gaps, defects, and areas of risk,
- measure the output adequacy, sufficiency, and reliability, and
- assess operational reliability.Â
Risk management includes the practices, procedures, and policies necessary to identify, analyze, assess and control risks.  A company may choose to mitigate risks based upon simply embracing the risk, risk transfer, risk retention, risk avoidance, or any other risk management strategy (or set of strategies) in proper management of future events.Â
Often the new expert in a job role must attain a working knowledge of the industry jargon and buzzwords as part of their initial risk management training. If you find yourself as your company’s enterprise risk management expert you are going to see these terms regularly.
So, what’s the bottom line? – Mitigate the risks in your business and profit model immediately. Apply this information to improve your profitability, re-engineer business models, and strengthen or gain competitive advantage in the marketplace.
Let me know: How could this article could be made more useful for you?
Apply the free Fiscal Test and see where your leaks are. From the author of the forthcoming book, ‘Stick Out Your Balance Sheet & Cough: Best Practices for Long Term Business Health’, Gary W Patterson - Copyright 2009