ERM Frameworks- Usefulness of framework for risk management in organizations
In an organization, a variety of risks prevails, and most of the risks are associated with technology, globalization, increasing customer demands, restructurings, reporting deficiencies, or even financial instruments that are complex by nature. A variety of ERM frameworks are in use, and the common ones are ISO, RMA, COSO, GAO, FERMA, and others. Most of these frameworks set similar objectives and strategies. At first, risks are identified and thereafter assessed. Following that, the risks are treated, and few control mechanisms are used. Lastly, the degree of risks is communicated. The ISO 31000: 2009 is one such ERM frameworks that have been published in 2009. It is a standard that has been created by the collaboration of technical advisors across 20 nations. The standard is useful enough for a range of organizations operating under different industries. The size, complexity, or even type of organization does not matter while implementing this standard. Risk management could be valid using the ISO standard. For instance, the corporate governance system as well as the financial reporting system can be improved using ISO standard. The only requirement is to identify the risk and thereafter raise awareness in the organization. Leaders should effectively lay out both the threats as well as the opportunities that emerge during the risk management process. Moreover, setting the standard also implies that an organization is complying the international norms as well as regulatory requirements before making a decision. The traditional risk management attributes are also included in ISO standard. For instance, the health, safety, performance, environmental protection as well as incident management are all included in this standard. The standard effectively addresses issues related to stakeholder management. Again, the risk management policies can be developed by policy makers using this standard.
Moreover, the ISO 31000 is another standard that has been updated in 2018 and the purpose is to apply the principles associated with risk management. The newly updated ISO 31000 has ensured that the risk management strategies should be simple and emphasis has been given on leadership concepts. Ultimately, the top management is responsible for managing risks in an organization by ensuring continuous interaction among top leaders. In this version of ISO, approximately 11 new principles have been adopted so that the framework can be applied effectively. Regardless of new principles, the overall aim of the standard remains same as the original one. Organizations can adopt the new standard in order to meet its needs that are associated with projects, services, assets, processes, operations, structure and context. It is important to share the knowledge about this resource because safety and quality are the two most important criteria that organizations should maintain and ISO standard ensures it. By knowing about the details of the standard, it would be easier to know whether a product has been tried and tested using standard guidelines. Meeting the expectations of customers would be a possibility as well. Hence, it has significant societal contribution and people involved in international trade should be aware of this framework.
Reference Link
https://www.researchgate.net/profile/Michele_Rubino3/publication/329091297_A_Comparison_of_the_Main_ERM_Frameworks_How_Limitations_and_Weaknesses_can_be_Overcome_Implementing_IT_Governance/links/5bf508faa6fdcc3a8de63240/A-Comparison-of-the-Main-ERM-Frameworks-How-Limitations-and-Weaknesses-can-be-Overcome-Implementing-IT-Governance.pdf