IRM Enterprise Risk Management Principles
The Institute of Risk Management's approach to enterprise risk management focusing on strategic value creation.
IRM Enterprise Risk Management Principles
Introduction
The Institute of Risk Management (IRM) promotes a value-creating approach to risk management that goes beyond compliance to support strategic decision-making.
Core Principles
1. Risk Management Creates Value
- Protects and creates shareholder value
- Enables better decision-making
- Reduces earnings volatility
- Maintains stakeholder confidence
2. Risk is About Uncertainty
- Both threats and opportunities
- Uncertainty about objectives
- Strategic, operational, and project levels
3. Risk Management is Integral
- Part of organizational processes
- Not a standalone activity
- Embedded in culture
- Everyone's responsibility
Risk Management Process
Context Setting
- Internal and external environment
- Stakeholder analysis
- Risk criteria definition
- Scope determination
Risk Identification
- Systematic identification of uncertainties
- Use of multiple techniques
- Capture of cause and effect
Risk Analysis
- Understanding the risk
- Likelihood and consequence assessment
- Existing controls evaluation
Risk Evaluation
- Compare against criteria
- Prioritization decisions
- Treatment requirements
Risk Treatment
- Avoid, reduce, share, or accept
- Cost-benefit analysis
- Implementation planning
Communication and Consultation
- Throughout the process
- With stakeholders
- Two-way dialogue
Monitoring and Review
- Continuous process
- Control effectiveness
- Changing context
Professional Competencies
- Risk identification and assessment
- Quantitative analysis
- Communication and influencing
- Business acumen
- Ethical practice