ERM Frameworks

Question 1

ERM - Integrated Framework

Answer 1

To assist organizations in developing a comprehensive response to risk management

Question 2

Risk

Answer 2

The probability that some event will happen that can affect the achievement of goals and objectives

Question 3

Value

Answer 3

Stock price up and/or pay dividends - Develop Value, Willing to face risk

Question 4

Value (CPER)

Answer 4

Creation, Preservation, Erosion, and Realization. Value is defined by the type of entity

Question 5

Value Creations

Answer 5

Benefits have to exceed cost of resources. Need to generate a profit.

Question 6

Value Erosion

Answer 6

Do not want value to go down. The cost is greater than the benefit.
- Faulty Strategy

Question 7

Value Realization

Answer 7

Dividends/SP > cost “capital gain” Value is received by stakeholders. Brand is recognized, leadership, customer satisfaction

Question 8

Mission, Vision, and Core Values

Answer 8

What an entity strives to be and how it wants to conduct business..Successful and ethically

Question 9

Mission

Answer 9

Objective, core purpose

Question 10

Vision

Answer 10

Strategy

Question 11

Vision

Answer 11

Strategy

Question 12

Core Values

Answer 12

“How” to achieve goals - ethics, culture, core values

Question 13

CCPIS

Answer 13

To manage risk and create value

Culture, Capabilities, Practices, Integration with Strategy

Question 14

ERM

Answer 14

The culture, capabilities, and practices, integrated with strategy setting and performance, that organizations rely on to MANAGE RISK in creating, preserving, and realizing value.

Question 15

Culture

Answer 15

Core Values, collective thinking, shaping decisions

Question 16

Capabilities

Answer 16

Competitive Advantage

Exploitation

Question 17

Practices

Answer 17

Continually Applied through all levels of the entity

Question 18

Integration with Strategy

Answer 18

Setting and Performance
Performance - Why do you exist? - mission
What’s your vision/strategy?

Question 19

Managing Risk Linked to Value

Answer 19

Value - Reasonable expectation, value creation depends on risks assumed

Question 20

Risk Appetite

Answer 20

Willingness to assume risk

A range rather than a specific limit and provide guidance on the practices

Question 21

Value and Risk

Answer 21

Directly related - risk assumed and expected return

Question 22

Risk Inventory

Answer 22

All risk that could impact an entity (economic, societal, demographics, legal)

Question 23

Entity-wide Risks

Answer 23

Holistic view/ are we diversified
Portfolio View
Organizational Sustainability
Performance Management

Question 24

5 Components of ERM (GOPR) and 20 Principles

Answer 24

Somewhat resemble to the COSO cube

Question 25

1. Governance and Culture (DOVES)

Answer 25

Tone at the top - core values - EBOCA Defines desired culture - how conservative or aggressive Exercises board oversight - entity's strategy, business objectives Attracts, Develops, and Retains Capable Individuals (Employees

Question 26

2. Strategy and Objective Setting (SOAR)

Answer 26

Mission/Vision - define risk appetite - Risk appetite (strategy setting) - Analyze business context

Question 27

2. Strategy and Objective Setting (SOAR)

Answer 27

Mission/Vision - define risk appetite - Risk appetite (strategy setting) - Analyze business context - Risk Appetite (what risk is suitable), maybe quantitative - Strategies - More equity/ less debt, aggressively conservatively - Objectives - Goals and objectives has to be reachable, must be realistic

Question 28

3. Performance (VAPIR)

Answer 28

Evaluate, ID & respond to risk using ARTS Similar to risk assessment - Identify Risk - Assess Severity of Risk - Helps to prioritize, look at it at multiple levels. identify triggers - Prioritize risk - Risks Responses (ARTS) (Look at chart) - View Portfolio - (Entity-wide view)

Question 29

4. Review and Revision (SIR)

Answer 29

Assess substantial changes, pursue improvements Internal - Change in officers Reviews risk and performance Improve

Question 30

5. Information, Communication, and Reporting (Ongoing) (TIP)

Answer 30

IT, Risk info, Performance - OIE - Relevant information (internal & external) - Technology - Fair, Accurate, Complete, and Timely Effective data management - Performance - How did we do in managing risk

Question 31

Pass Key

Answer 31

5 Components and 20 Principles

Question 32

Risk Assessment

Answer 32

Actual, Target, and Inherent Risk

Question 33

Residual risk

Answer 33

What happens after an action is taken