What is ERM?

Enterprise Risk Management (ERM):

The discipline by which an organization in any industry assesses, controls, exploits, finances and monitors risks from all sources for the purpose of increasing the organization’s short and long-term value to its stakeholders. Successful ERM programs manage risk across two dimensions: Time & Space.

Time:

Properly developed ERM programs shift your Risk Management focus from short-term (once-a-year when traditional insurances policies renew) to a long-term program designed with the organization’s overall goals in mind.

Space:

ERM programs increase the Depth of Coverage of an organization, allowing for formal insurance across the three distinct areas of risk: Core, Operational and Strategic.

 

Risk:

The potential for future losses or shortfalls due to the deviation of actual results from expected results.

Even the U.S. Government encourages small and mid-size businesses to prepare for a wide range of threats. Below is a chart which outlines potential risks and impacts of those risks.

What is ERM?

(Chart from Ready.gov landing page for businesses as of March 2015).

Core Risk

  • General Liability
  • Auto Liability
  • Directors & Officers
  • Property Liability
  • Professional Liability
  • E & O
  • Worker’s Compensation

Operational Risk

  • Administrative Actions
  • Cyber Risk
  • Employment Practices
  • Litigation Defense Expense
  • Business Risk Indemnity
  • Legal Expenses
  • Commercial Crime
  • Excess General Liability
  • Excess Prof. Liability
  • Existing Deductibles

Strategic Risk

  • Business Interruption
  • Contract Termination
  • Subcontractor Default
  • Reputational Damages
  • Terrorism
  • Supply Chain Interruption
  • Regulatory & Legislative Changes