Effective risk management:

Effective Risk Management (ERM) in business incorporates the techniques and procedures
utilized by associations to oversee chances and take advantage of lucky breaks identified with
the accomplishment of their targets.
The objectives of ERM are clear and generally agreed but that is where the agreement ends.
There is no general agreement that what this process looks like and how it should work.
There is no agreement between the company and regulators. And there is not any kind of
standards to maintain. And most of the ERM processes used do not produce the desired
outcomes or stand up to the critical analysis. Most companies failed in recent times have
their ERM system in place. And they have been exposed to these risk management systems
themselves. So how we will be able to design an effective ERM system. If there is no ERM
system and most probably its desire.
Why the system does not Work:
Ad Hoc and unsystematic risk management: A a lot of traditional risk management have been
based on Ad Hoc or unsystematic methods or different kinds of approaches you have
experienced them before that are relying on personal experience to determine how
important individual risk is and to make sure that you do not repeat the same mistake twice.
To determine appropriate risk and control levels. To be lying on intuitive and subjective
opinions. And thinking that the insurance will equal risk management. Having an emergency
response plane relying on reactive rather than proactive control. Complying with statutory
requirements and having a prescribed control method. If they can effectively control the risk.
And the company should follow what other people are doing to be successful. We should be
able to identify, quantify and control specific types of risk in an every effective ERM system.
Directors and shareholders have a legal requirement to demand and an effective risk
management system that manages organizational risk and keep the directors informed.
However, most large organizations could not tell their directors what the company top risk
are they are facing and how to manage these kinds of risks. This happens because most of the
company directors and shareholders are not aware of the flows and unsystematic
approaches. The company stockholders should also be demanding this that how their ERM
system is performing. And how to maximize the chances of an organization to meet its goals
and objectives by reducing the chances of failure.
References
https://en.wikipedia.org/wiki/Enterprise_risk_management

https://www.investopedia.com/terms/e/enterprise-risk-management.asp