Traditional Risk Management vs Enterprise Risk Management: Which Approach Is the Best Choice for Your Company?
According to the National Association of Corporate Directors (NACD), "there are a number of things that boards need to do as the number and magnitude of business risks increase," reports Mondaq (Oct. 10, Butterfield). NACD supports the proposition that boards need a more disciplined board review of enterprise risk management (or ERM) and greater awareness of risk. The association recommends following eight key practices for organizational risk management. They include: one, clarify the roles of the board, committees, and management; two, understand the company's risk profile; three, define the company's risk appetite; four, integrate strategy, risk, and performance discussions; five, ensure transparent and dynamic risk reporting; six, reinforce clear accountability for risk; seven, verify that mitigation reduces risk exposure; and, finally, assess risk culture.
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