1、xx Enterprise Risk Management Integrated Framework,中国培训师大联盟 www.china-,Todays organizations are concerned about:,Risk Management Governance Control Assurance (and Consulting),ERM Defined:,“ a process, effected by an entitys board of directors, management and other personnel, applied in strategy sett
2、ing and across the enterprise, designed to identify potential events that may affect the entity, and manage risks to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives.”Source: COSO Enterprise Risk Management Integrated Framework. 2004. COSO.,
3、Why ERM Is Important,Underlying principles: Every entity, whether for-profit or not, exists to realize value for its stakeholders.Value is created, preserved, or eroded by management decisions in all activities, from setting strategy to operating the enterprise day-to-day.,Why ERM Is Important,ERM s
4、upports value creation by enabling management to:Deal effectively with potential future events that create uncertainty.Respond in a manner that reduces the likelihood of downside outcomes and increases the upside.,This COSO ERM framework defines essential components, suggests a common language, and
5、provides clear direction and guidance for enterprise risk management.,Enterprise Risk Management Integrated Framework,The ERM Framework,Entity objectives can be viewed in the context of four categories: Strategic Operations Reporting Compliance,The ERM Framework,ERM considers activities at all level
6、s of the organization:Enterprise-level Division orsubsidiary Business unitprocesses,Enterprise risk management requires an entity to take a portfolio view of risk.,The ERM Framework,Management considers how individual risks interrelate.Management develops a portfolio view from two perspectives: - Bu
7、siness unit level - Entity level,The ERM Framework,The eight components of the framework are interrelated ,The ERM Framework,Internal Environment,Establishes a philosophy regarding risk management. It recognizes that unexpected as well as expected events may occur.Establishes the entitys risk cultur
8、e.Considers all other aspects of how the organizations actions may affect its risk culture.,Objective Setting,Is applied when management considers risks strategy in the setting of objectives.Forms the risk appetite of the entity a high-level view of how much risk management and the board are willing
9、 to accept.Risk tolerance, the acceptable level of variation around objectives, is aligned with risk appetite.,Event Identification,Differentiates risks and opportunities.Events that may have a negative impact represent risks.Events that may have a positive impact represent natural offsets (opportun
10、ities), which management channels back to strategy setting.,Event Identification,Involves identifying those incidents, occurring internally or externally, that could affect strategy and achievement of objectives.Addresses how internal and external factors combine and interact to influence the risk p
11、rofile.,Risk Assessment,Allows an entity to understand the extent to which potential events might impact objectives.Assesses risks from two perspectives:- Likelihood- Impact Is used to assess risks and is normally also used to measure the related objectives.,Risk Assessment,Employs a combination of
12、both qualitative and quantitative risk assessment methodologies.Relates time horizons to objective horizons.Assesses risk on both an inherent and a residual basis.,Risk Response,Identifies and evaluates possible responses to risk.Evaluates options in relation to entitys risk appetite, cost vs. benef
13、it of potential risk responses, and degree to which a response will reduce impact and/or likelihood.Selects and executes response based on evaluation of the portfolio of risks and responses.,Control Activities,Policies and procedures that help ensure that the risk responses, as well as other entity
14、directives, are carried out.Occur throughout the organization, at all levels and in all functions.Include application and general information technology controls.,Management identifies, captures, and communicates pertinent information in a form and timeframe that enables people to carry out their re
15、sponsibilities. Communication occurs in a broader sense, flowing down, across, and up the organization.,Information & Communication,Monitoring,Effectiveness of the other ERM components is monitored through: Ongoing monitoring activities. Separate evaluations. A combination of the two.,Internal Contr
16、ol,A strong system of internal control is essential to effective enterprise risk management.,Expands and elaborates on elements of internal control as set out in COSOs “control framework.” Includes objective setting as a separate component. Objectives are a “prerequisite” for internal control.Expand
17、s the control frameworks “Financial Reporting” and “Risk Assessment.”,Relationship to Internal Control Integrated Framework,ERM Roles & Responsibilities,Management The board of directors Risk officers Internal auditors,Internal Auditors,Play an important role in monitoring ERM, but do NOT have prima
18、ry responsibility for its implementation or maintenance. Assist management and the board or audit committee in the process by:- Monitoring - Evaluating- Examining - Reporting - Recommending improvements,Visit the guidance section of The IIAs Web site for The IIAs position paper, “Role of Internal Au
19、ditings in Enterprise Risk Management.”,Internal Auditors,2010.A1 The internal audit activitys plan of engagements should be based on a risk assessment, undertaken at least annually. 2120.A1 Based on the results of the risk assessment, the internal audit activity should evaluate the adequacy and eff
20、ectiveness of controls encompassing the organizations governance, operations, and information systems.2210.A1 When planning the engagement, the internal auditor should identify and assess risks relevant to the activity under review. The engagement objectives should reflect the results of the risk as
21、sessment.,Standards,Organizational design of business Establishing an ERM organization Performing risk assessments Determining overall risk appetite Identifying risk responses Communication of risk results Monitoring Oversight & periodic review by management,Key Implementation Factors,Organizational
22、 Design,Strategies of the business Key business objectives Related objectives that cascade down the organization from key business objectives Assignment of responsibilities to organizational elements and leaders (linkage),Example: Linkage,Mission To provide high-quality accessible and affordable com
23、munity-based health care Strategic Objective To be the first or second largest, full-service health care provider in mid-size metropolitan markets Related Objective To initiate dialogue with leadership of 10 top under-performing hospitals and negotiate agreements with two this year,Establish ERM,Det
24、ermine a risk philosophy Survey risk culture Consider organizational integrity and ethical valuesDecide roles and responsibilities,Example: ERM Organization,ERM Director,Vice President and Chief Risk Officer,Corporate Credit Risk Manager,Insurance Risk Manager,ERM Manager,ERM Manager,Staff,Staff,Sta
25、ff,FES Commodity Risk Mg. Director,Risk assessment is the identification and analysis of risks to the achievement of business objectives. It forms a basis for determining how risks should be managed.,Assess Risk,Environmental Risks Capital Availability Regulatory, Political, and Legal Financial Mark
26、ets and Shareholder RelationsProcess Risks Operations Risk Empowerment Risk Information Processing / Technology Risk Integrity Risk Financial RiskInformation for Decision Making Operational Risk Financial Risk Strategic Risk,Example: Risk Model,Source: Business Risk Assessment. 1998 The Institute of
27、 Internal Auditors,Risk Analysis,DETERMINE RISK APPETITE,Risk appetite is the amount of risk on a broad level an entity is willing to accept in pursuit of value.Use quantitative or qualitative terms (e.g. earnings at risk vs. reputation risk), and consider risk tolerance (range of acceptable variati
28、on).,Key questions:What risks will the organization not accept? (e.g. environmental or quality compromises) What risks will the organization take on new initiatives? (e.g. new product lines) What risks will the organization accept for competing objectives? (e.g. gross profit vs. market share?),DETER
29、MINE RISK APPETITE,Quantification of risk exposure Options available:- Accept = monitor- Avoid = eliminate (get out of situation)- Reduce = institute controls- Share = partner with someone (e.g. insurance) Residual risk (unmitigated risk e.g. shrinkage),IDENTIFY RISK RESPONSES,Impact vs. Probability
30、,Control,Share,Mitigate & Control,Accept,High Risk,Medium Risk,Medium Risk,Low Risk,Low,High,High,I M P A C T,PROBABILITY,Low,High,High,I M P A C T,PROBABILITY,High Risk,Medium Risk,Medium Risk,Low Risk,Example: Call Center Risk Assessment,Loss of phones Loss of computers,Credit risk Customer has a
31、long wait Customer cant get through Customer cant get answers,Entry errors Equipment obsolescence Repeat calls for same problem,Fraud Lost transactions Employee morale,Control Risk Control Objective Activity,Completeness Material Accrual of transaction open liabilities not recorded Invoices accrued
32、after closing,Issue: Invoices go to field and AP is not aware of liability.,Example: Accounts Payable Process,Dashboard of risks and related responses (visual status of where key risks stand relative to risk tolerances) Flowcharts of processes with key controls noted Narratives of business objective
33、s linked to operational risks and responses List of key risks to be monitored or used Management understanding of key business risk responsibility and communication of assignments,Communicate Results,Monitor,Collect and display information Perform analysis- Risks are being properly addressed- Contro
34、ls are working to mitigate risks,Accountability for risks Ownership Updates- Changes in business objectives- Changes in systems- Changes in processes,Management Oversight & Periodic Review,Internal auditors can add value by:,Reviewing critical control systems and risk management processes.Performing
35、 an effectiveness review of managements risk assessments and the internal controls.Providing advice in the design and improvement of control systems and risk mitigation strategies.,Implementing a risk-based approach to planning and executing the internal audit process. Ensuring that internal auditin
36、gs resources are directed at those areas most important to the organization.Challenging the basis of managements risk assessments and evaluating the adequacy and effectiveness of risk treatment strategies.,Internal auditors can add value by:,Facilitating ERM workshops.Defining risk tolerances where
37、none have been identified, based on internal auditings experience, judgment, and consultation with management.,Internal auditors can add value by:,For more information,On COSOsEnterprise Risk Management Integrated Framework,visitwww.coso.orgorwww.theiia.org,This presentation was produced by,xx Enterprise Risk Management Integrated Framework,
