What is the primary goal of enterprise risk management?

The primary goal of enterprise risk management (ERM) is to identify and manage risks that could impact the achievement of an organization’s objectives. ERM takes a holistic approach, considering various types of risks—operational, strategic, financial, compliance, and reputational—that an organization may face. By systematically identifying these risks and assessing their potential impacts, ERM allows an organization to develop strategies to mitigate, transfer, or accept risks, ultimately enhancing decision-making processes and helping to safeguard the organization’s overall resources and objectives.

This focus on comprehensive risk management goes beyond merely seeking to cut costs or maximize profits. While cost reduction may be a positive outcome of effective risk management, it is not the primary aim. Similarly, prioritizing marketing effectiveness or financial profit does not encompass the broader risk landscape that ERM addresses. The emphasis is on understanding how various risks interplay and affect the organization as a whole, leading to informed decision-making that aligns with strategic goals and enhances resilience.