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Risk Management Objectives | ERM Framework - YouTube
Channel: Executive Finance
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let's start with a look at the
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objectives that are across the top face
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of the Cosell queue now we have four
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categories of objectives strategic
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operations reporting and compliance
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strategic objectives are those
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high-level goals aligned with the
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mission of the organization strategic
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objectives are those very same
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objectives that have been defined as
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critical to the success of corporate
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strategy consider such examples those as
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achieving a 60% market share or
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maintaining a technological leadership
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position in the industry strategic and
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operational objectives may be subject to
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externalities that are beyond the
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control of management and in these
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instances our enterprise risk management
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system provides reasonable assurance
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that the board is notified in a timely
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manner as to the extent of progress
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towards the achievement of these
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objectives you don't often think about
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Enterprise Risk Management as having
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much of a role to play in delivering
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strategy but as we work through the
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framework you'll see that risk
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management has everything to do with
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meeting your strategic objectives next
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we have operational objectives and
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operational objectives are those goals
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describing the effective and efficient
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use of resources consider such
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operational objectives as maintaining a
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defect rate less than 0.1% of production
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or achieving a plant availability of 95
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percent or containing overtime hours to
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less than 2% of the total hours worked
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these sorts of objectives are important
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because obviously they impact
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profitability but also product quality
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and customer service all of the things
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that are necessary for our business to
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be successful the risk management
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framework provides a structured guide
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rails to keep the organization on track
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to meet these objectives now reporting
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objectives address the reliable internal
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and external reporting internal
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reporting is important to ensure that
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the key indicators are measured and
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monitored to enable management to take
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action whenever necessary now external
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reporting is important to ensure that
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the organization meets the needs of its
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stakeholders so consider the impact of
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the continued flow of capital that is
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necessary to meet the strategic
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objectives a lot of time in recent years
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has been spent focusing in on internal
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controls over financial reporting to
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comply with sarbanes-oxley Act in the US
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and national instrument 52 109 here in
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Canada the coastal model underpins much
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of this work but is only focused in on
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one of the four objectives of erm in our
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discussions we are looking to
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considering all four objectives but with
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the same framework that you likely have
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some experience with that was used to
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address the certification requirements
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lastly we have compliance objectives
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compliance objectives ensure conformance
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with all applicable laws and regulations
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so for example compliance with health
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and safety regulations hazardous
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material regulations environmental
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protection securities laws civil laws
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failure to meet our compliance objective
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can result in a significant fine or even
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threaten going concern so obviously we
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need to have a mechanism in place to
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monitor progress towards the achievement
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of these sorts of objectives as well now
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a particular objective may fall into
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more than one category the same way a
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single objective may be the
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responsibility of more than one
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executive the categorization doesn't
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impact how the framework is applied
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what's important for you to understand
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in this session is that the objectives
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of risk management don't exist in
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isolation the objectives contemplated by
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this dimension of the COSO framework
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often begin with those identified
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already in the strategic and operating
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plans of the business but we should not
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be limited in our thinking and we must
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consider all objectives explicit or
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implied to bring context to our risk
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management plan with that in mind let's
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move on to the actual application of the
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COSO framework itself which is where in
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the next video we'll begin so until next
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time don't stop to get to the top when
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you get to the top don't stop
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