Enterprise risk management 'doesn't work'
NEW YORK/LONDON - Enterprise risk management (ERM) at financial institutions does not work, and could be creating additional operational risk, according to a recent paper, The End of Enterprise Risk Management by David Martin, chief risk officer of AllianceBernstein, and Michael Power, professor of accounting at the London School of Economics.
ERM is perceived as the nirvana of risk management in the financial services industry but definitions of it vary widely. The ideal image, which the paper sets out, is of a risk officer controlling all risks in an organisation from one mission-control dashboard. The authors define ERM as a purely quantitative approach to managing risk in financial organisations.
"The paper is not a critique of the implementation process but more that the model is wrong and based on a very old-fashioned theory of
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