Introducing ERM

Abstract

Enterprise Risk Management (ERM) is an enterprise-wide process with which companies identify, assess and actively manage all key risks in order to generate value for all stakeholders. Based on this definition, the chapter explains which key success criteria constitute modern risk management and what needs to be paid special attention to in practice in order to exploit the potential of ERM to create value. In particular, there is need for reconsideration that financial risks are not the most important risk category in most industrial companies. Furthermore, a positive risk culture is supported if historically grown “risk silos” can be overcome and a uniform ERM language can be established company-wide. If a company manages successfully to consolidate ERM as a self-evident part of the strategy development, strategy execution and decision-making processes, it is capable to unfold its value-generating potential.