Response to Discussions 1

ERM:

With the globalization of the economy and rapid changes in the social environment, companies are exposed to various risks. Interest rates, stock price fluctuations, natural disasters, business fraud, quality accidents... The types of risks are endless.

In recent years, a method called ERM (company-wide risk management), which comprehensively evaluates such risks from the viewpoint of the entire organization, has been attracting attention. However, until now, it was common for different departments to have jurisdiction over and manage the risks, so the image of ERM being “temporary epidemic” “difficult to understand” “heavy burden” is persistent, It is also true that there are many companies that hesitate to introduce it (Agarwal & Ansell 2016).

ERM (Enterprise Risk Management) is one of the risk management methods. A system that seeks to manage all risks that may occur in the management of a company on a company-wide basis. In the conventional risk management method, it is general that "individual departments" are responsible for risk management according to the risks that arise. For example, if there is a financial risk, that risk was managed exclusively by the finance department.

However, with the changes in the environment surrounding companies, risks are becoming enormous and complex, and it is becoming difficult to appropriately deal with them by conventional individual risk management. On the other hand, ERM is characterized in that the risk is grasped, evaluated, and managed "whole company". By addressing risks comprehensively from management to employees, it is possible to better understand the nature of risks and the relationships between risks, and to take optimal countermeasures (Haywood, et al 2017).

ERM begins by recognizing what risks are involved. Next, consider the possibility of occurrence and the degree of impact, and consider how to deal with it. Regarding risks, we will observe the fixed points such as whether the response is sufficient or whether the risks have decreased, and report the risks. And again, from risk awareness. This is the ERM cycle.

In order to put ERM into practice, it is essential to understand and cooperate with each department within the company. Since each department actually formulates and implements countermeasures, without the approval of the key person in each department, risk management will be irrelevant by name alone (Haywood, et al 2017). At that time, it is a big point that general affairs is the leader. In addition to the propelling power of the manager, the information power, management and sense of balance of general affairs are indispensable for gaining understanding and cooperation within the company.

References

Agarwal, R., & Ansell, J. (2016). Strategic change in enterprise risk management. Strategic Change, 25(4), 427-439.

Haywood, L. K., Forsyth, G. G., De Lange, W. J., & Trotter, D. H. (2017). Contextualising risk within enterprise risk management through the application of systems thinking. Environment Systems and Decisions, 37(2), 230-240.