Enterprise Risk Management (ERM):
ERM involves a comprehensive approach to identifying, assessing, managing, and monitoring risks across an organization. Effective governance of organizational assets is a key component.
Importance of a Risk Profile:
Developing a detailed risk profile is the first step in supporting ERM implementation. It provides a clear understanding of the organization's risk landscape, including the types of risks, their potential impact, and likelihood.
A risk profile helps in prioritizing risks, allocating resources, and establishing appropriate risk management strategies.
Steps to Develop a Risk Profile:
Identify all organizational assets and their importance to business operations.
Assess the vulnerabilities and threats associated with each asset.
Determine the potential impact and likelihood of risk events.
Document the findings to create a comprehensive risk profile.
Supporting Implementation:
A detailed risk profile informs decision-makers and supports the development of policies, controls, and procedures to mitigate identified risks.
It serves as a foundation for continuous monitoring and improvement of the risk management program.
Other Options:
Hiring experienced resources, scheduling internal audits, and conducting risk assessments are essential actions but come after establishing a detailed risk profile. The risk profile provides the necessary information to guide these activities effectively.
References:
The CRISC Review Manual emphasizes the importance of developing a detailed risk profile as a foundational step in the ERM process (CRISC Review Manual, Chapter 1: Governance, Section 1.6.5 Asset Valuation).
