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COSO - Enterprise risk management Integrated Framework - Coggle Diagram
COSO - Enterprise risk management Integrated Framework
ERM centers around:
Aligning risk appetite and strategy
Enhancing risk response decisions
Reducing operational surprises and losses
Identifying and managing multiple and cross-enterprise risks
Seizing opportunities
Improving deployment of capital
ERM definition components:
A process, ongoing and flowing through an entity
• Effected by people at every level of an organization
• Applied in strategy setting
• Applied across the enterprise, at every level and unit, and includes taking an entitylevel portfolio view of risk
• Designed to identify potential events that, if they occur, will affect the entity and to manage risk within its risk appetite
• Able to provide reasonable assurance to an entity’s management and board of directors
• Geared to achievement of objectives in one or more separate but overlapping categories
ERM objectives to achieve in organization:
Strategic – high-level goals, aligned with and supporting its mission
• Operations – effective and efficient use of its resources
• Reporting – reliability of reporting
• Compliance – compliance with applicable laws and regulations.
Components of Enterprise Risk Management
a) Internal Environment – The internal environment encompasses the tone of organization, how risk is viewed, risk appetite and ethical environment of operations
b) Objective Setting – Objectives must exist before management can identify potential situations influencing organization. Executive summary management sees that objectives are set and are appropriate with risk appetite
c) Event Identification – Internal and external events affecting achievement of an entity’s objectives are identified and distinguished from opportunities and risks
d) Risk Assessment – Risks are analyzed, considering likelihood and impact, as a benchmark how they should be managed
e) Risk Response – Management selects risk responses – avoiding, accepting, reducing, or sharing risk - creating actions that fit in with risk appetite
f) Control Activities – Policies and procedures are established and implemented to help risk responses to be carried out correctly
g) Information and Communication – Relevant information is identified, captured, and communicated effectively to others to help carry out functions
h) Monitoring – The entirety of enterprise risk management is monitored and modifications are vital. Monitor through ongoing management activities and/ or evaluations