What is Enterprise Risk Management?
Enterprise Risk Management (ERM) is defined by the Committee of Sponsoring Organizations (COSO) as “a process effected by an entity’s board of directors, management and other personnel. The process is applied by strategy-setting across the enterprise designed to identify potential events that may affect the entity and manage risk (to be within its risk appetite), to provide reasonable assurance regarding the achievement of entity objectives.”
Why evaluate Enterprise Risk?
Evaluating risk is a standard operating practice that is always present at the University.
The Central Michigan University Board of Trustees and administration have made it a priority to examine the University’s complete portfolio of risks, consider how those individual risks interrelate, and develop an appropriate risk mitigation approach to address these risks in a manner that is consistent with their long-term strategy.
It is vitally important and forward thinking to comprehensively identify, manage and document these risks so that they can be adequately monitored. This led to the establishment of the Enterprise Risk Committee (ERC) and the associated charge. Therefore, the (ERC) is charged with continually monitoring potential risks to the institution, assigning responsibility for areas of risk and, ultimately, determining possible methods for risk reduction.
Central Michigan University is a complex organization with seven academic colleges, including a college of medicine, with an annual budget of approximately $500 million. The 19,500 students and nearly 2,500 employees need to be assured that our enterprise is
Risks include financial risk, operating risk, strategic risk, regulatory risk, environmental risk, reputational risk, political risk, and a whole host of other types of risk. Managing this portfolio of risks is especially important to help ensure the University can continue to serve the University’s faculty, staff and students. By strategically managing risk, we can reduce the chance of loss, create greater financial stability, and protect our resources so we can continue our mission of supporting teaching, research and public service.