The Importance of Enterprise Risk Management
Introduction
Enterprise risk management “calls for corporations to identify all the risks they face, to decide which risks [need] managing actively, and then to make that plan of action available to all stakeholders (not simply shareholders) as part of their annual report (Quinn, 2008). According to Quinn (2008), “What you don’t know about corporate enterprise risk management (ERM) may hurt you—and probably already is. Think of the number of post-Enron cases that have resulted in retirement benefits and stock value being wiped out overnight and weaknesses in corporate information technology systems that have allowed hackers to steal your identity (if not your wealth). All of these and a growing number of events are debacles you might have avoided had companies had an effective ERM program in place.” So what does ERM mean to management when it comes to improving the planning, performance, and effectiveness of business operations through better decision making; and, how do employees, customers and investors benefit from having a strong ERM process? We live in a world where technology dominates everything. Businesses cannot efficiently or effectively operate if they are not technologically equipped. For every workstation there is almost always a computer. For every computer there is almost always an internet connection. That Internet connection connects to the entire world. By being connected to the entire world, there is bound to be a hacker at the end of one of those connections. Not only is the computer at risk but everything that comes along with it. As Drab (2006) indicates, “One of the most common and overlooked threats to a company’s assets and trade secrets is the networked peripheral. Multifunction and digital hardcopy devices are highly intelligent machines complete with their own operating