Risk management recast

Risk: The concept of enterprise-wide risk management (ERM) has been widely discussed for many years, and yet a lack of true ERM has been identified as a major deficiency that has contributed to many institutions’ troubles. What should we mean when we talk about ERM?

Lori Evangel (LE): There are several guiding principles. The most basic of which is to ensure that you are picking up all the risks of the firm and overcoming the silos that naturally occur in any large organisation. Next, the risks must be identified, aggregated, measured, quantified and reported in a genuinely holistic way. Finally, the risk management function must be independent and have a seat at the table; we speak about risk management not as oversight but as a strategic partnership with the businesses. So, we have a seat at the table, are independent and competent, and seek to develop best-in-breed quantitative tools. In this way, we are seeking to add and to maximise the risk-return proposition of the firm.

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