Risk Management Advisors

Don P. Baker Financial Group -  Enterprise Risk Management Consultants

Enterprise risk management (ERM) in business includes the methods and processes used by organizations to manage risks and seize opportunities related to the achievement of their objectives. ERM provides a framework for risk management, which typically involves identifying particular events or circumstances relevant to the organization's objectives (risks and opportunities), assessing them in terms of likelihood and magnitude of impact, determining a response strategy, and monitoring progress. By identifying and proactively addressing risks and opportunities, business enterprises protect and create value for their stakeholders, including owners, employees, customers, regulators, and society overall.

Don P. Baker Financial Group understands that the risk management processes of U.S. corporations are under increasing regulatory and private scrutiny. Risk is an essential part of any business. Properly managed, it drives growth and opportunity. Executives struggle with business pressures that may be partly or completely beyond their immediate control, such as distressed financial markets; mergers, acquisitions and restructurings; disruptive technology change; geopolitical instabilities; and the rising price of energy.

ERM frameworks defined

There are various important ERM frameworks, each of which describes an approach for identifying, analyzing, responding to, and monitoring risks and opportunities, within the internal and external environment facing the enterprise. This may include:

1. Avoidance: exiting the activities giving rise to risk
2. Reduction: taking action to reduce the likelihood or impact related to the risk
3. Share or insure: transferring or sharing a portion of the risk, to reduce it
4. Accept: no action is taken, due to a cost/benefit decision

Goals of an ERM program

Organizations by nature manage risks and have a variety of existing specialized departments or functions ("risk functions") that identify and manage particular risks. However, each risk function varies in capability and how it coordinates with other risk functions. A central goal and challenge of Don P. Baker Financial Group ERM is improving this capability and coordination, while integrating the output to provide a unified picture of risk for stakeholders and improving the organization's ability to manage the risks effectively.

Typical risk functions

• Strategic planning - identifies external threats and competitive opportunities, along with strategic initiatives to address them
• Marketing - understands the target customer to ensure product/service alignment with customer requirements
• Insurance - ensures the proper insurance coverage for the organization
• Operational Quality Assurance - verifies operational output is within tolerances
• Operations management - ensures the business runs day-to-day and that related barriers are surfaced for resolution
• Customer service - ensures customer complaints are handled promptly and root causes are reported to operations for resolution
• Internal audit - evaluates the effectiveness of each of the above risk functions and recommends improvements