Responses to peer ERM Discussion 3

Enterprise Risk Management

From the different cases I reviewed, one case study that was most interesting to me is the case study involving Eli Lilly. I found this case study interesting because it exemplifies some of the best practices for a good ERM. The first justification is that the company involved all key leaders in risk management project. Second, the company integrated the ERM and corporate strategy effectively. The company also have multidisciplinary team and this is very important in ERM because unlike any other type of risks, ERM involves risks affecting the enterprise and most enterprises could be so big that normal traditional risk management practices may not help (Do, Railwaywalla and Thayer, 2016). Eli Lilly’s case confirmed to me that indeed enterprise risk management requires a solid information foundation that reflects the entire enterprise, not just a single department or business area. By using all available external and internal information, cognitive platforms can extend the same analytical capabilities throughout the organization, achieving maximum visibility and greater opportunities through sharing and reusing information (Do, Railwaywalla and Thayer, 2016). The company also does well by educating employees on why they should treat ERM as a valuable undertaking that is likely to add value to the company (Florio, 2017). Lastly, I liked the fact that Eli Lilly treats risk identification as ongoing process. Indeed, Eli Lilly demonstrates that ERM not only requires the company to identify all risks it faces and decide on the risks to be actively managed, but it also involves having a working action plan.

I strongly believe that ERM is necessary in the contemporary organization. ERM is necessary for the contemporary organization because its victory determines the business enterprise’s life and health. If an organization fails to recognize risks to its existence, it will not be ready to face any risks (Kumar, 2019). Also investors choose the company they want to invest in based on their quality of ERM. They read the company’s ERM to determine the risk profile and then choose whether the company is worthwhile or not.

References

Florio, C. (2017). Enterprise Risk Management and Firm Performance: The Italian Case. The British Accounting Review, 56-74.

Kumar, S. (2019). Importance of Enterprise Risk Management. Product Dossier.

Do, H., Railwaywalla, M. and Thayer, J. (2016). Integration of ERM with Strategy. Retrieved from: https://erm.ncsu.edu/az/erm/i/chan/library/Integration_of_ERM_and_Strategy_Case_Study.pdf