Enterprise Risk Management and Corporate Governance - A Discussion

What is Enterprise Risk Management?

Enterprise risk management or ERM is a plan based strategy of business that is mainly aimed at identifying, assessing and preparing for any type of hazards, dangers that could affect the enterprise. The risks in this case can interfere with the operations and the objectives of the firms and the strategies that are implemented by them.

The current business related circumstances have forced organizations to re-evaluate and make changes in the risk management based plans in order to improve the overall management related aspects. In today's environment, decisions are made on a daily basis and they are further evaluated in order to reduce the negative impact of various risks that are faced by firms and their impact on the operations.

I was curious if you thought there was any specific type of financial firm that had to change their risk management plans more than others?  Or even businesses other than in the financial world.

The concept of corporate governance can be defined as the system of the practices, expectations and rules used to dictate corporate behavior. Good corporate governance ensures corporate success and economic growth. Corporate governance is also used to decrease operational risk, decrease conflict and frauds.

The capital related decisions that are made by the organizations are also affected in a huge manner by the corporate governance of the firms. For example, the diesel scam related issues that had been faced by Volkswagen had a huge influence on its image in the industry. The scandal was mainly based on the wrong decisions that had been made by the governance of the organization and the steps that were implemented even after investigations had taken place. The wrong decisions made by the leaders had a huge influence on the profitability levels gained by Volkswagen and its image as well.

If you took over Volkswagen for the purposes of repairing its image, what would be your first order in instilling good corporate governance and why?