In today’s globalized economy, organizations are experiencing constant change, which leads to even higher levels of uncertainty. These uncertainties manifest as risks and vulnerabilities that threaten the organization, whether they are known or unknown. Mature risk management practices that involve integrated control processes can provide a strong competitive advantage. Several benefits of a strong ERM framework are listed below:
- Reductions of incidences of negative events such as; earnings surprises, litigation, fraud, regulatory actions and press coverage of control breakdowns and management failures
- Improvement of operational effectiveness and efficiency
- Growth of management, board and creditor confidence
- Increased potential for success when restructuring and empowering employees with responsibilities previously carried out at higher organizational levels
- Greater prevention of employee wrongdoing, regulatory actions and litigation
- Enhancement of communication throughout the organization
- Improvement of control effectiveness and cost reduction by building controls intobusiness processes.