According to research done by Risk Monitor Magazine, the common problem in most corporate scandals is that the relevant root-cause risks are not identified or mitigated across the enterprise. Instead, organizations address the symptoms of these risks as they occur, which is often too late. One department or group of employees, are usually blamed, leaving the organization vulnerable to failures that stem from the same systemic issue.

Today hard truths are staring us in the face. Poor risk management has the ability to severely impact on business. The ultimate implication could be erosion of value through consistent losses or negative impact to revenue and profit streams. Damaged reputation, product failures and financial loss can all cascade and force companies into the worst position – having to close its doors. Companies who do not evaluate risks associated with innovations, customers, employees, reputations, opportunities or general operations will fail to spot hazards and take steps to avoid them.

ERM is based on the recognition that every business is made up of interconnected parts. Because these parts are interconnected, the risks associated with each part, or business area, are also interconnected. In order to prevent one business area from suffering from the same underlying risk as another, ERM helps corporations identify and mitigate root-cause risks across the enterprise. By identifying these risks, businesses can anticipate what lies ahead, allocate resources efficiently, prevent failures and ensure business performance, which includes maintaining a sound reputation.

To properly identify root-cause risk, organizations need an effective Enterprise Risk Management program. ERM is therefore not only a legal and moral obligation, but a method of preserving a corporation’s reputation and achieving its strategic objectives. Quazy Global Limited handles ERM.