Enterprise risk management (ERM) is a methodology of identifying and analyzing activities or events which pose a risk in a firm, organization, or company. Risks often bar firms from achieving their objectives, and they could as well lead to the firms exiting from the market. Adopting an ERM strategy ensures that firms remain prepared and identify risks before they occur. One of the measures to take in such events is employing appropriate mitigative measures to either prevent the risky event from occurring or reduce the impacts of the event if it occurs; best adopted for events that are not fully under the firm's control (2017). ERM strategy is key in ensuring that firms do not miss out on an advantageous opportunity due to the likely risks. This paper will be outlining more on ERM strategy and how it can be adopted in the firm's objectives.

           An effective ERM strategy is one that aligns with the organization's overall strategy. It is possible to align firms to their overall strategy, and there are several steps towards this accomplishment. The first step is decomposing the strategic objectives. The main objective of this step is to ensure that risk managers comprehend the logic applied behind all the objectives and aids in ensuring a focused risk evaluation procedure. The second step is comprised of the identification of the core factors linked to uncertainty. This step requires managers to utilize their various structures to identify if there are assumptions made by the management (Braumann, 2018). They should identify the assumptions with the highest levels of uncertainties, thus calling for risk assessment and analysis.

           The third step is conducting risk evaluation. It involves carrying out a scenario assessment to evaluate the impact of uncertainty on the firm's strategic goals. The final step involves turning the results from the risk assessment step into actions. Managers and the risk assessment committee should discuss the results with the executive to ascertain if they can be put into action. These results will be the primary determinant of whether the strategy requires to be revised or can be implemented and integrated into the firm's strategy.           

           While ERM strategy is recommendable and an important feature in any firm that's awake to the risks facing it, it faces numerous issues (2017). One of the most notable issues with the ERM strategy is linked to consistency in defining risk. It is always challenging to define risk consistently in firms since what may not be considered a risky event in a given department is considered risky in another department. Such instances prevent ERM strategy from being applied uniformly (Arpin et al., 2011). Firms that look forward to reaping from ERM strategy should come up with solutions and measures of defining risks consistently.  A firm is not ready to assess any risk until it comes up with a consistent definition.

           Another issue with ERM is its inability to assess risk consistently. Firms have to come up with means of evaluating risks constantly across all their departments. Normally, firms tend to leave the task of risk assessment to respective departments; this initiative does not come with consistency and has a negative impact on the overall implementation of the ERM strategy. For example, a given department may have different analyses on a particular risky event, which often ends up impacting the implementation of the ERM strategy. Lack of consistency in risk evaluation renders it hard for the ERM committee to follow up and report on. Coming up with solutions for consistency in risk evaluation can ensure that the ERM team has a mastery of all types of risks that are likely to befall it. It will also ensure that the effectiveness of the ERM strategies applied reaches optimum levels (Arpin et al., 2011). Solving this challenge could result in heightened reliability and unswerving monitoring and reporting.

           There is also the challenge of risk reporting. ERM is applied across all departments in firms for optimum results. There often rises an issue with risk reporting across the firm. All departments have to report risks they note, and they have to do so on time to ensure that the risks are addressed before they mature into an incident. Reporting is such a critical feature and requires to be done in a coordinated manner for it to be impactful.

Enterprise Risk Management

1. Introduction

Enterprise risk management (ERM) is a methodology of identifying and analyzing activities or events which pose a risk in a firm, organization, or company. Risks often bar firms from achieving their objectives, and they could as well lead to the firms exiting from the market. Adopting an ERM strategy ensures that firms remain prepared and identify risks before they occur.

2. Steps to Integrating ERM

1. Decomposing the strategic objectives
2. Identification of the core factors linked to uncertainty
3. Conducting risk evaluation
4. Turning the results from the risk assessment step into actions

3. Issues related with ERM

1. Inconsistency in defining risks
2. Inability to assess risks consistently

Challenge of risk reporting.