RSK2601
STUDY GUIDE
,RSK2601 - ENTERPRISE RISK MANAGEMENT
STUDY GUIDE
TOPIC 1
ENTERPRISE RISK MANAGEMENT IN CONTEXT
Topic Contents
Lesson 1: Introduction
Lesson 2: Corporate Governance
Aim
By the end of this topic, you should be able to demonstrate an understanding of risk,
risk management and enterprise risk management (ERM) within the broader business
environment. You should also be able to analyse and evaluate corporate governance
from a risk-management perspective.
Learning Outcomes
After completing this topic, you should be able to:
Define enterprise risk management (ERM) and explain its importance to
organisations.
Analyse and evaluate corporate governance in relation to risk.
Develop an approach for implementing ERM within an organisation.
OVERVIEW
Major corporate failures, including the collapse of Enron and WorldCom in 2002, the
global financial crisis, and more recently the Steinhoff scandal, significantly weakened
investor confidence and raised serious concerns about corporate ethics. As the demand
,for investment capital has expanded in both developed and developing economies,
while restrictions on the movement of capital have declined, investors and regulators
have increasingly recognised sound corporate governance as an important factor in
attracting both local and international investment.
Poor risk-management practices and weaknesses in corporate governance have
frequently been identified as contributing factors in the failure of large organisations.
The limitations of traditional approaches to managing risk have consequently
contributed to the development and adoption of enterprise risk management. Increasing
awareness of the interconnected nature of organisational risks has encouraged
businesses to move towards a more comprehensive and integrated approach.
This lesson introduces the concepts of ERM and corporate governance. It also
considers the advantages associated with effective ERM and corporate governance and
examines a general framework that organisations can use when implementing these
practices.
RSK2601/1
LESSON 1
INTRODUCTION
Contents
Aim
Key concepts
Learning outcomes
Learning material
Self-assessment
Summary
Aim
, At the conclusion of this lesson, you should have a sound understanding of the
background and development of risk, risk management and enterprise risk
management.
Key Concepts
Risk
Risk management
Enterprise risk management (ERM)
Risk diversity
Risk-taking
Learning Outcomes
After completing this lesson, you should be able to:
Define and explain risk, risk management, risk diversity and risk-taking.
Explain how risk is connected to business opportunities.
Explain the objectives and responsibilities of the board.
Discuss the board's responsibilities while considering the integration of risk
management into organisational activities.
Define ERM and explain its advantages.
Explain the general structure and components of ERM.
LEARNING MATERIAL
Lesson 1 covers Chapter 1 of the prescribed textbook.
1.1 INTRODUCTION
Risk management has become an important factor in business decision-making, and
stakeholders are increasingly interested in how organisations identify and respond to
uncertainty. Risk can influence strategic choices, create uncertainty within an
organisation, or form an inherent part of normal business operations.
STUDY GUIDE
,RSK2601 - ENTERPRISE RISK MANAGEMENT
STUDY GUIDE
TOPIC 1
ENTERPRISE RISK MANAGEMENT IN CONTEXT
Topic Contents
Lesson 1: Introduction
Lesson 2: Corporate Governance
Aim
By the end of this topic, you should be able to demonstrate an understanding of risk,
risk management and enterprise risk management (ERM) within the broader business
environment. You should also be able to analyse and evaluate corporate governance
from a risk-management perspective.
Learning Outcomes
After completing this topic, you should be able to:
Define enterprise risk management (ERM) and explain its importance to
organisations.
Analyse and evaluate corporate governance in relation to risk.
Develop an approach for implementing ERM within an organisation.
OVERVIEW
Major corporate failures, including the collapse of Enron and WorldCom in 2002, the
global financial crisis, and more recently the Steinhoff scandal, significantly weakened
investor confidence and raised serious concerns about corporate ethics. As the demand
,for investment capital has expanded in both developed and developing economies,
while restrictions on the movement of capital have declined, investors and regulators
have increasingly recognised sound corporate governance as an important factor in
attracting both local and international investment.
Poor risk-management practices and weaknesses in corporate governance have
frequently been identified as contributing factors in the failure of large organisations.
The limitations of traditional approaches to managing risk have consequently
contributed to the development and adoption of enterprise risk management. Increasing
awareness of the interconnected nature of organisational risks has encouraged
businesses to move towards a more comprehensive and integrated approach.
This lesson introduces the concepts of ERM and corporate governance. It also
considers the advantages associated with effective ERM and corporate governance and
examines a general framework that organisations can use when implementing these
practices.
RSK2601/1
LESSON 1
INTRODUCTION
Contents
Aim
Key concepts
Learning outcomes
Learning material
Self-assessment
Summary
Aim
, At the conclusion of this lesson, you should have a sound understanding of the
background and development of risk, risk management and enterprise risk
management.
Key Concepts
Risk
Risk management
Enterprise risk management (ERM)
Risk diversity
Risk-taking
Learning Outcomes
After completing this lesson, you should be able to:
Define and explain risk, risk management, risk diversity and risk-taking.
Explain how risk is connected to business opportunities.
Explain the objectives and responsibilities of the board.
Discuss the board's responsibilities while considering the integration of risk
management into organisational activities.
Define ERM and explain its advantages.
Explain the general structure and components of ERM.
LEARNING MATERIAL
Lesson 1 covers Chapter 1 of the prescribed textbook.
1.1 INTRODUCTION
Risk management has become an important factor in business decision-making, and
stakeholders are increasingly interested in how organisations identify and respond to
uncertainty. Risk can influence strategic choices, create uncertainty within an
organisation, or form an inherent part of normal business operations.
