QUESTION 3 Essay Example | Topics and Well Written Essays - 500 words

QUESTION 3 - Essay Example Companies can adapt the principles into their policies, rules, and regulations to enhance their performance. Handling these obstacles and balancing the risks with the company growth and return goals to avoid facing challenges from uncertainty, â€Å"Enterprise â€Å" (2004) outlines internal environment, objective setting, event identification, risk assessment, information and communication, risk response, control activities, and monitoring as the eight principal factors warranting attention in that order: (1) ERM helps the company to prevent risk by creating a good environment within the firm. The risk will be identified by including risk management philosophy, risk appetite, integrity and will be monitored by the firm’s people. (2) Management should set up the objectives before identifying the risk to ensure that it aligns with the company’s mission and risk appetite is appropriately factored in. (3) A company should identify both internal and external events that have an impact on its success and distinguish between risks and opportunities. (4) A company can deal with and respond to the risks effectively by setting up and implementing policies and procedures. (5) The company should identify, capture, and communicate the relevant information across the organization in a suitable format and timeframe so that its workforce has total clarity and are accountable to their duties. (6) Management can decide a set of actions to respond to risks by avoiding, accepting, reduci ng, or sharing risk along the company’s risk tolerances guideline and risk appetite. (7) In order to manage the risks, the company should analyze the likelihood and impact of them and evaluate on an inherent and a residual basis. (8) Dynamically monitoring the whole process of activities by independent evaluations, and modifying some points when necessary represents the ultimate flexibility of ERM, rendering it complete and effective. While abiding by