SU5.2 Flashcards
(23 cards)
What does ERM influence in an organization?
ERM influences the development of the entity’s strategy
ERM does not create the strategy but informs it.
Define strategy in the context of an organization.
An organization’s plan to achieve its mission and vision, and to apply its core values.
What is the main purpose of an entity’s mission?
Establishes why it exists.
What does an organization’s vision represent?
What the entity aims to achieve over time.
What are core values in an organization?
The entity’s beliefs of what is acceptable or unacceptable, influencing behavior.
How can a chosen strategy affect value creation?
If a chosen strategy does not support the entity’s mission and vision, it will cause value destruction.
What is the relationship between risk and performance referred to as?
Risk profile.
What should management consider when evaluating strategies?
The type, severity, and interdependencies of risks.
True or False: The relationship between risk and performance is linear.
False.
What are the benefits of integrating ERM with business activities?
- Anticipate risks earlier
- Identify and pursue opportunities
- Respond to deviations quickly
- Develop a comprehensive risk view
- Improve collaboration and information sharing
How can organizations encourage transparency in risk management culture?
By implementing forums for sharing information without fear.
What should management do to ensure risk is considered in strategy evaluation?
Set strategy clearly while considering risk.
Fill in the blank: ERM does not create the entity’s strategy; it ______ the organization on risks associated with alternative strategies.
informs
What is a risk profile?
Composite view of the risk at a particular level of the entity.
What type of risks may arise from a healthcare provider’s chosen strategy?
- Risks relating to medical innovation
- Risks to high-quality care
- Risks from managing new partnerships
What is a key aspect of integrating ERM into organizational practices?
Regular and consistent monitoring of performance results and changes in the risk profile.
What should the board and management determine regarding the strategy?
If the strategy works together with the risk appetite.
How can organizations improve their risk management capabilities?
By hiring capable individuals and considering third parties in discussions of risk.
What does effective integration of ERM promote in management meetings?
Greater transparency and increased responsiveness to risks.
What does the risk profile allow management to consider?
The type, severity, and interdependencies of risks.
What should an organization do if its strategy has a high risk of failure?
Revisit and consider revising the strategy.
What does ERM help organizations understand about their strategy and business objectives?
That they may not align with the mission, vision, and core values.
What is the purpose of aligning core values and behaviors with incentives?
To achieve strategy and business objectives effectively.
