Enterprise Risk Management: Effective Implementation

Robust risk management has continued to be of great concern to practitioners, academics, and the business community because it augments organizational performance and creates value for shareholders. This is because inadequate risk management policies create adverse economic and social consequences for stakeholders. Poor risk management can result in large ¿dead weight¿ costs in organizations, which negatively affect organizational value. By reducing risk, a company can reduce the amount of expensive equity capital needed to support its operating risk cost. As organizations expand, one of the keys to successful growth is steady risk management. In order to yield benefits, risk management must be addressed and practiced at all levels of an organization. For organizations to survive in this turbulent environment and gain competitive advantage, a holistic approach to handling risk needs to be adopted.