What is one goal that is NOT associated with ERM practices?

What is one goal that is NOT associated with ERM practices?

• A. Define the business model and strategy.
• B. Prioritize the associated risks.
• C. Identify ways to mitigate risks.
• D. Elimination of operational risk.

Answer: (D)

The goal of eliminating operational risk is not typically associated with Enterprise Risk Management (ERM) practices. ERM is focused on identifying, assessing, and managing risks to minimize their impact on an organization’s objectives. While organizations strive to mitigate risks and reduce their likelihood or impact, complete elimination of operational risk is unrealistic due to the inherent nature of operations and the complexities involved in any business environment. ERM practices aim to develop a comprehensive understanding of risks, prioritize them, and establish strategies to mitigate their effects. This includes defining the business model and strategy, prioritizing associated risks to focus resources effectively, and identifying ways to reduce the potential impact of those risks. Thus, while reducing operational risk is a goal of ERM, the idea of wholly eliminating it does not align with the practical and strategic nature of risk management, which acknowledges that some level of risk is always present.

The goal of eliminating operational risk is not typically associated with Enterprise Risk Management (ERM) practices. ERM is focused on identifying, assessing, and managing risks to minimize their impact on an organization’s objectives. While organizations strive to mitigate risks and reduce their likelihood or impact, complete elimination of operational risk is unrealistic due to the inherent nature of operations and the complexities involved in any business environment.

ERM practices aim to develop a comprehensive understanding of risks, prioritize them, and establish strategies to mitigate their effects. This includes defining the business model and strategy, prioritizing associated risks to focus resources effectively, and identifying ways to reduce the potential impact of those risks. Thus, while reducing operational risk is a goal of ERM, the idea of wholly eliminating it does not align with the practical and strategic nature of risk management, which acknowledges that some level of risk is always present.