Welcome to the world of risk management or what is sometimes now called enterprise risk management or ERM.
For someone looking for a reference to concepts used in the past or for the newly designated risk expert, you will see elements of enterprise risk management in some of the concepts below. You may have been part of:
- Contingency planning,
- A due diligence review,
- An acquisition review,
- A merger and acquisition review,
- An operational assessment
- A strategic facilitated top management session in this approach, or
- Risk management.
Using a common source for definitions from Business Dictionary, think of these concepts as:
Acquisition planning coordinates the activities of the personnel involved in the purchase of an asset or supply to ensure its timely and cost effective acquisition.
Contingency planning is activity undertaken to ensure proper and immediate follow-up steps will be taken by a management and employees in an emergency. Its major objectives are to ensure:
(1) containment of damage or injury to, or loss of, personnel and property, and
(2) continuity of the key operations of the organization.
Due diligence is a measure of prudence, responsibility, and diligence that is expected from, and ordinarily exercised by, a reasonable and prudent person under the circumstances.
Operational assessment is an evaluation of working effectiveness and suitability of a system through test methods aimed at:
(1) identification of defects, gaps, areas of risk,
(2) measurement of the adequacy of the output, and
(3) assessment of the reliability of the operations.
Risk management includes policies, procedures, and practices involved in identification, analysis, assessment, control, and avoidance, minimization, or elimination of unacceptable risks. A firm may use risk assumption, risk avoidance, risk retention, risk transfer, or any other strategy (or combination of strategies) in proper management of future events.
Often the new expert in a function has to obtain a working knowledge of the buzzwords and industry jargon as one of their first steps. If you are the new enterprise risk management expert, or risk management expert, you will see these terms regularly.