Basics Of Enterprise Risk Management

Basics Of Enterprise Risk Management

- Sonjai Kumar

Risk management is not a subject that gives a product with clear price tag sold in the market such as life insurance, health insurance, general insurance, pensions etc. Such products have a clear price tag at which it is bought by the customers which see value and sold by insurance players. Such value in the product perceived by the customer in reducing their risk and therefore they pay price for this risk coverage. However, risk management on the other hand does not offer any products at which this could be purchased what does risk management do to different stakeholders?

The customers of risk management are same players (insurance or any organizations) manufacturing products (and selling products in the market) helping giving them optimum value to their customer and shareholders. This is achieved through reducing volatility or uncertainty of outcome thereby helping organizations in adding value.

Behind these outputs of value addition, there are certain key principles of risk management which sets out clear description of what risk management activity should be in practice (Risk Management initiatives) and what it should achieve ( Risk Management delivery). These lay down very strong foundation on which the structure of risk management is built up.

This provides the acronym PACED and provide a very good set of principles that forms a foundation of a successful approach to risk management within any organization.