COSO Enterprise Risk Management Framework
The comprehensive COSO ERM framework covering governance, strategy, objectives, performance, and review & revision. Essential for establishing enterprise-wide risk management.
COSO ERM Framework Overview
What is COSO ERM?
The Committee of Sponsoring Organizations (COSO) Enterprise Risk Management framework is the leading standard for enterprise risk management, updated in 2017 to better address the evolving business environment.
Five Components and 20 Principles
1. Governance & Culture
- Exercise board risk oversight
- Establish operating structures
- Define desired culture
- Demonstrate commitment to core values
- Attract, develop, and retain capable individuals
2. Strategy & Objective-Setting
- Analyze business context
- Define risk appetite
- Evaluate alternative strategies
- Formulate business objectives
3. Performance
- Identify risk
- Assess severity of risk
- Prioritize risks
- Implement risk responses
- Develop portfolio view
4. Review & Revision
- Assess substantial change
- Review risk and performance
- Pursue improvement in ERM
5. Information, Communication & Reporting
- Leverage information and technology
- Communicate risk information
- Report on risk, culture, and performance
Implementation Steps
- Obtain executive sponsorship
- Assess current state maturity
- Define target state and roadmap
- Align with strategic planning
- Embed into business processes
- Monitor and continuously improve