Enterprise Risk Management

What is Enterprise Risk Management (ERM)?

Enterprise Risk Management (ERM) is a new management concept fast ascending the corporate agenda globally. ERM is the management process of identifying and analyzing risk from company perspective which includes a disciplined approach in aligning strategy, processes, people, technology, and knowledge with a focus of managing the potential risks (Lai, Azizan and Samad, 2011).

Alumina was reported to be in violation of environmental discharge in a routine EPA compliance evaluation inspection five years ago. Roger Lloyd, the chairman of Alumina, is furious because the company public image is in jeopardy. The company needs to develop a successful ERM. According to Hard (2008), there are seven key elements of successful ERM:

1) Element 1: Management commitment;

2) Element 2: Communication and consultation;

3) Element 3: Policies and procedures;

4) Element 4: Training and education;

5) Element 5: Effective and efficient framework;

6) Element 6: Risk management is applied in practice;

7) Element 7: Ongoing monitoring and review.

According to U.S department of Health services (1996), PAHs enter water through discharges from industrial and wastewater treatment plans. Most PAHs do not dissolve easily in water. They stick to solid particles and settle to the bottoms of lakes or rivers. The first step of successful ERM is management commitment. This step is vital for Alumina because it sets up the framework of ERM process. The executive team members of the company need to set the tone for everyone to follow. Alumina must create the internal control and governance system by creating ERM committee which includes members of executive team, environmental team, and operation team. The ERM committee is created with the purpose to get the input, ideas, understanding about the ERM and the limitations while in compliance with EPA, Clean Water Act (CWA), Safe Drinking Water Act (SDWA), and Clean Air Act (CAA).

The second...