Corporate Risk and Governance
Enterprise Risk Management (ERM) is an integrated, structured, regular and ongoing process implemented across the entire organization to identify, understand and respond to the inherent risks associated with the business. Increasingly, businesses have to deal with a lot of volatility, uncertainty, complexity, and ambiguity in the business environment. Such unpredictability calls for a coordinated and comprehensive management approach such as ERM to establish some clarity amidst the chaos. The increased scrutiny of companies by regulatory bodies, rating agencies, and stakeholder groups after the global financial crisis is also driving the need for ERM.
ERM paves the way for understanding such uncertainties and identifying the inherent and evolving risks so that business leaders can make better decisions and be prepared to manage risks as and when they emerge. However, despite being response ready, companies may still be exposed to risks due to events that they cannot control. Yet, being prepared for risks will mitigate the intensity of risk impacts. A company that is strategically prepared to respond to risks can also sharpen its competitive advantage and can even potentially achieve a ‘first-mover’ advantage.
Risk Management Governance Framework and Practices
ERM identifies, prioritizes, and reports risks in the business. Thus, it protects the value of the company by ensuring compliance to processes and practices that are critical for business operations. For instance, the management of a restaurant chain, which failed to renew its Halal certification, would not just lose its customers who were Muslims, but it would also damage its brand value by losing the trust the customers held in the brand. Had the risk of non-renewal been identified and accountability had been assigned to prevent such risk, the restaurant chain could have protected its value.
ERM is not merely a process to ensure compliance or a management routine to protect value by preventing risks, but it is a value-adding exercise that prepares the organisation to respond and manage risks that are unavoidable. Thus, an effective ERM process will reveal opportunities to reduce loss or expand the business. An efficient ERM approach will be comprehensive and analyse the entire value chain of a company – both upstream and downstream – to evaluate and strategically respond to risks. For example, if a particular industry is facing the risk of supply uncertainties due to changes in trading or political climate, a company that is proactive in responding will secure alternative suppliers and not only be able to prevent losses but will also have the opportunity to expand its market share.
Characteristics of a good ERM framework
- The company’s risk appetite is clearly defined, and a common risk language is established to facilitate a shared understanding of the ERM framework.
- It is an enterprise-wide process that breaks all functional silos and comprehensively identifies all categories of risks – financial, strategic, operational, technical and hazards.
- Instead of focusing on all risks, it focuses on critical risks and also consolidates risks by analysing the interactivity of risks so that resource deployment remains effective.
- It does not merely identify and report risks but also communicates to the entire organisation and ensures engagement, buy-in, and accountability across the organisation.
- It is linked to strategic planning and compliance and responsiveness are embedded in the operations of the organisation.
- It builds the organisational resilience and agility to withstand the impact and adapt to the evolving changes.
Effective Corporate Risk Governance
We can work with you to assess your enterprise risk appetite, identify the risks inherent to your business and operations, assess its impact and develop strategic ERM framework that best suits your organisation in maximising value through an appropriate balance of growth, return, risks, and deployment of resources. We will help you to quantify risk impacts for a better understanding of risks and responses across your enterprise and embed a risk lens into the business planning, strategies, budgeting, operations, monitoring, and compliance functions of your enterprise to minimise exposure. By aligning risk indicators to the strategic plans and operational performance, we can help you to monitor, evaluate, and escalate deviations. Thus, you will be able to gain greater control amidst uncertainties and leverage the opportunities for business growth.
Drafting of Comptroller’s Handbook Booklet
- ERM Capability Assessment
- Risk Appetite Definition
- ERM Policy Development
- Enterprise Risk Assessment
- End-to-End ERM Design & Implementation
- ERM System Selection & Implementation
- Risk Analysis & Quantification
- Capital Allocation
- Risk Mitigation and Transfer Mechanisms
Corporate Governance and Enterprise Risk Management (ERM)
Amidst uncertainties, the management and business units of companies depend on their boards to provide guidance and oversight on risks. In a risk-intelligent enterprise, the board, management and business units work in tandem to achieve corporate performance objectives while complying with governance standards. Thus, the overall responsibility of risk oversight, management and corporate risk culture lies with the board; hence, the spotlight is turned on corporate governance, the system by which companies are directed and controlled in the interest of the shareholders and other stakeholders. A crucial role of corporate governance is to monitor the parties that control the corporate resources and contribute to corporate accountability and performance while protecting and creating shareholder value.
Corporate governance is a means to ensure accountability of directors, transparency, and appropriate disclosures of corporate affairs, and to safeguard the balance of power between the shareholders and the board. Against the backdrop of volatile markets, declining investor confidence and mounting regulatory scrutiny, corporates face the need to review and update their governance framework and risk management practices not just for compliance but for spotting opportunities to improve strategic decisions, competitive advantage and business performance.
Drafting Guidelines of the Singapore Corporate Governance Code
Our service offerings are tailored to meet your needs in the realms of leadership, performance monitoring and evaluation, audit and accountability and communication with stakeholders. We help to establish and maintain good governance practices, with a particular focus on integrating risk oversight as a critical part of the governance agenda. Our governance services include creating an integrated framework, enhancing individual, group and organisational performance and improving corporate culture.
We offer the following services:
- Advice on board composition and structuring
- Develop a governance framework for group and subsidiaries
- Evaluate corporate governance at investment targets
- Allocation, delegation and transfer of authority
- Establishing roles and responsibilities
- Strategy and risk oversight
- Performance evaluation framework
- Review of internal audit functions
- Shareholder engagement
- Assistance in compliance and disclosure issues
Roles and Responsibilities of Internal Audit
Internal audit is a means to gain assurance that risk management processes are working effectively and that key risks are being managed to an acceptable level. Its primary purpose is to provide an objective assurance that the risk management framework and process are efficient and adequate. Independence and objectivity of the auditors are essential for the internal audit’s reports to be reliable. Our internal audit service is focused on supporting the leadership agenda in achieving overall corporate objectives. We can provide independent and valued insights and expert assistance to the audit committees and the management to assess the efficacy of the risk management framework and procedures.
We offer the following services:
- Evaluate risk assessment process
- Evaluate risk management measures
- Evaluate reporting
- Reviewing the identification and management of critical risks
Contact our Team:
Head, Risk Assurance
Risk assurance services you can rely on.
With a sound risk management plan, you’ll gain greater control of uncertainties, achieve compliance, and a more resilient business structure.