ERM - Enterprise Risk Management: Issues and Cases

1 Establishing the Internal and External Contexts

Establishing context includes understanding why the organization is engaged in ERM, the need and scope of the ERM program, and how the organization defines ERM. Defining strategy is often the first step for the organization because all risk management is associated with critical risks to strategy.

1.1 MANAGING RISKS TO ENABLE STRATEGY

Jean-Paul Louisot

Université Paris 1 Panthéon-Sorbonne, Directeur pédagogique du CARM_Institute, Paris, France

Christopher Mandel

SVP, Strategic Solutions, Sedgwick, Inc., long term senior risk management practitioner/leader

1.1.1 The Origin of Modern Risk Management

Spectacular events occurred during the final decades of the twentieth century that fed the “fear of the millennium”. The first decade of the twenty-first century also fed fears, including alternating natural events or technological catastrophes, increasing terrorism, social upheavals like the “Arab Spring” that began in 2011, the Asian tsunami in 2004, and the typhoon in Japan in 2013. Traditional media, expanded by social media, did not miss an opportunity to blame the ravages of globalization, the brittleness of the world socio-economic system or to question its long-term sustainability. It is clear that the relationships between the different actors in the system are becoming more and more complex while their interdependencies are increasing. This is precisely the state of the system that might be explained by the tenets of chaos ...