COSO Enterprise Risk Management (ERM) Framework

Practice Area: WG&L FRM Brand: WG&L Financial Reporting & Management

COSO Enterprise Risk Management (ERM) Framework
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COSO’s Enterprise Risk Management—Integrated Framework promises to do for ERM what the COSO internal control framework did for internal control. That is, it promises to standardize a proven method for effectively identifying, assessing, and managing risk. The ERM framework incorporates many of the elements of the COSO internal control framework, but does not replace it or supersede it.

Details

The internal control reporting requirements of the Sarbanes-Oxley Act have focused organizations’ attention on all aspects of internal control, including the management of business risks. The COSO ERM framework is intended for use by management in the continuing quest to evaluate and improve an organization’s enterprise-wide risk management efforts. According to COSO, the ERM framework “expands on internal control, providing a more robust and extensive focus on the broader subject of enterprise risk management.”

Volume One of the ERM framework includes an Executive Summary, the ERM framework itself, and seven appendices. Topics covered include:

a definition of enterprise risk management;
objective setting;
event identification;
risk assessment;
risk response;
control activities;
information and communication;
monitoring;
roles and responsibilities;
the limitations of ERM;
a summary of key principles; and
the relationship between the COSO ERM and COSO internal control frameworks.

Volume Two provides detailed techniques for applying the ERM framework. It includes practical illustrations of techniques that can be used at various levels of an organization. Checklists, graphs, charts, questionnaires, and other tools are provided.

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