Factors that affect the adoption of Enterprise Risk Management (ERM)

Abstract

Risk Management (RM) is rapidly evolving; its practitioners are increasingly shifting focus from pure operational or financial risks to a broader Enterprise Risk Management (ERM). ERM involves a set of processes and methods used to manage risks that are not just associated with accidental losses but also associated with financial, strategic, technological and other business areas. This article highlights different factors that affect the adoption of ERM which include people’s perception of RM and the necessity for a risk-aware culture at all levels within organisations before adopting the ERM-based approach. The article also addresses a few popular ERM frameworks that help organisations to understand a complete picture of ERM activities and its functional areas. The work presented in this article is taken from an on-going project that is being undertaken to develop a practical tool for providing better analysis of risk data and improved knowledge management.