(6)What are benefits of Enterprise Risk Management?

Answer: ERM enhances capacity of the organisation to build value and achieve following benefits:

(1)Improved alignment of Risk Appetite & Strategy: Risk appetite is the maximum risk that an entity is ready to accept to achieve its objectives. ERM improves alignment of risk appetite and business strategy.

(2)Improved linkage between growth, risk and return: ERM provides platform to establish linkage between growth, risk and return.

(3)Improved Decision Making: ERM provides platform to evaluate various risk responses (i.e. avoid/reduction/share/accept) and take appropriate action.

(4)Improved Opportunity Management: ERM provides the platform to identify potential event to grab the opportunities for better performance.

(5)Improved Capital Allocation: ERM helps in optimum capital allocation by providing information on entity’s total risk.

(6)Reduce Operational losses: ERM provides capability to identify potential events and take appropriate action to minimize the operational losses.

(7)Management of cross-enterprise risks: ERM provides opportunity to manage cross-enterprise risks.

   (8)Management of multiple risks: ERM helps to manage multiple risks with single solution.