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Assignment sample solution of ERM405 - Enterprise Risk Management

Assessment Task: Enterprise Risk Management Framework

Develop an Enterprise Risk Management (ERM) framework for a medium-sized technology company. Your framework should include key components such as risk governance, risk identification, risk analysis, and monitoring.

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Risk-Management Assignment Sample

Q1:

Answer :

1. Introduction:
Enterprise Risk Management (ERM) is a structured approach to managing risks across an organization to achieve strategic objectives. For a technology company, the framework must address operational, cybersecurity, financial, and reputational risks.

2. ERM Framework Components:

a. Risk Governance:

  • Objective: Define roles and responsibilities for risk management.
  • Structure:
    • Establish a Risk Committee comprising senior management and department heads.
    • Appoint a Chief Risk Officer (CRO) to oversee risk management activities.

b. Risk Identification:

  • Conduct regular workshops with employees to identify risks across departments.
  • Use techniques like brainstorming, SWOT analysis, and industry benchmarking.

c. Risk Analysis:

  • Assess the likelihood and impact of identified risks using qualitative and quantitative methods.
  • Prioritize risks based on their criticality to the organization's objectives.

d. Risk Monitoring and Reporting:

  • Implement Key Risk Indicators (KRIs) to track emerging risks.
  • Develop a risk dashboard for real-time updates on risk metrics.
  • Schedule quarterly reviews of the ERM framework to ensure its relevance.

3. Example Application:
Risk Identified: Cybersecurity breach due to inadequate IT infrastructure.

  • Mitigation: Invest in advanced firewalls, employee training on phishing scams, and regular audits of IT systems.
  • Monitoring: Use KRIs such as the number of attempted breaches and time taken to respond to incidents.

4. Conclusion:
An effective ERM framework enables the technology company to proactively address risks, align risk management with strategic goals, and build resilience against potential disruptions.