This report critically examines the different aspects of ERM initiatives that are undertaken by the LEGO group with the objective of retaining the sustenance of the same while making dynamic expansions in the European markets.
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Running head: ENTERPRISE RISK MANAGEMENT ENTERPRISE RISK MANAGEMENT Name of the student Name of the university Author note
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1ENTERPRISE RISK MANAGEMENT Discussion question ThereportcriticallyexaminedthedifferentaspectsofERM(EnterpriseRisk Management) initiatives that are undertaken by the LEGO group with the objective of retaining the sustenance of the same while making dynamic expansions in the European markets (Fraser, Simkins& Narvaez,2014). The risk management strategies that were followed by the organization as broadly divided into four major elements relating to ERM, Monte Carlo Simulations, Active Risk and Opportunity Planning and Preparation for uncertainty. On the other hand, the risks were generally segregated under operational, financial, hazardous and other miscellaneous risks that might affect the operations of the venture (Agustina & Baroroh, 2016). In this relation, it has been noted that most of the elements of the risk mitigation strategies that were followed by the organization focused on mitigating financial risks that might obstruct the organization capability of increasing the profitability. Ontheotherhand,thecollegesanduniversitieshavebeenperceiveasisolated organizations which have no relevance to profit making or non- profit making institutions. Therefore, the governance structure and culture of the organizations greatly differed from the corporates. However, the discrepancies that were faced by the organizations relating to risks affected the capabilities of the organizations in maintaining the efficiency of the operations in orientation with the needs of the venture. It has been noticed that the organizations changed from a decentralized structure to a more concrete centralized structure for improving their skills of implementing and reviewing through the application of ERM. It has been noted that the increased accountability, external scrutiny, IT changes and increased levels of litigation are the major risks that are being faced by the universities and colleges (Sum& Saad,2017). Therefore, in this relation, the organizations employ the ERM into practice with the objective of
2ENTERPRISE RISK MANAGEMENT inducing specific leadership values and culture into practice with the objective of retaining the goodwill of the organizations. Therefore, the major difference between the ERM implementation between profit making organizations and the Higher Education environment are based on the aspects of values that drives the sustainability of the business. Annotated bibliography Viscelli, T. R., Beasley, M. S., & Hermanson, D. R. (2016). Research insights about risk governance:ImplicationsfromareviewofERMresearch.SAGEOpen,6(4), 2158244016680230. The risk management initiatives that are undertaken by the organizations are specifically based on the assessment and prioritization of the risks that might be encountered by the organizations while operating in the different markets. Viscelli, Beasley and Hermanson, (2016) stated in the research that the risk governance is currently considered as the topmost priority that is being encountered by the entrepreneurs and the board of directors. The assessment of the different risks based on the likelihood of occurrence and severity enables the governing bodies aware of the different strategies that might be instilled by the same with the objective of retaining thesustenanceoftheventures.Inthisrelation,theERMbasedoperationsenablesan organizational management in assessing the likelihood and severity of a risk and thereby plan effective measures for avoiding or mitigating the uncertainty. However, Viscelli, Beasley and Hermanson (2016) noted that most of the board members fail to identify whether the ERM processes are operating effectively or not. The lack of clarity in the process design might affect the capabilities of the organizations in continuing with the efficiency of the operations while operating in the different markets. The research by Viscelli,
3ENTERPRISE RISK MANAGEMENT Beasley and Hermanson (2016) examined the different organizations which implements ERM technology, the techniques that are involved in the ERM process and the role of internal audit in ERM. It has been noted during the study that the goal of ERM is to assessentity-widerisks that are being confronted by an organization rather than simply confining the assessment to one singular aspect. The wider scope provided by the ERM assessment technologies attracted the attention of most of the organizations, with diverse range of operations, towards its implementation.On the other hand, it has been noted that the IA (Internal Audits) have greatly supported in the ERM based operations throughenterprise-wide focus and that the operations of an IA is specifically risk based (Viscelli, Beasley & Hermanson, 2016). The audit committees contributed to the smooth functioning of the ERM through their knowledge on the different organizational procedures and methods and thereby micro managing the same. The specific knowledge and insight on the organizational activities enabled the organizational directors in maintaining the efficiency of the ERM. The research paper developed an insight on the impact created by ERM on the different elements of an organization like culture, strategy formulation and firm value, through assessment of existing literatures. In this elation, it might be stated that the research critically examined the value that is being proposed by ERM on the organizational operations through the enumeration of different concepts and models. The organizational directors and board of management specifically aimed at implementing the ERM with the objective of assessing the enterprise wide risks and its impact on the strategies. The assessment of the risks and application of ERM with the purpose of avoiding or mitigating would ensure organizational performance. Therefore, the research critically examined the different factors relating to ERM and the manner in which the
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4ENTERPRISE RISK MANAGEMENT same is being applied in the business models. On the other hands, the research also examined he role of Internal Audits in sustaining the ERM practices in firms.
5ENTERPRISE RISK MANAGEMENT References Agustina, L., & Baroroh, N. (2016). The relationship between Enterprise Risk Management (ERM) and firm value mediated through the financial performance.Review of Integrative Business and Economics Research,5(1), 128. Fraser, J., Simkins, B., & Narvaez, K. (2014).Implementing enterprise risk management: Case studies and best practices. John Wiley & Sons. Sum, R. M., & Saad, Z. M. (2017). Risk Management in Universities. In3rd International Conference on Qalb-Guided Leadership in Higher Education Institutions (iQALB 2017). Viscelli, T. R., Beasley, M. S., & Hermanson, D. R. (2016). Research insights about risk governance:ImplicationsfromareviewofERMresearch.SAGEOpen,6(4), 2158244016680230.