Summary of Fundamentals of Enterprise Risk Management

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Fundamentals of Enterprise Risk Management book summary
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Rating

8 Overall

8 Applicability

7 Innovation

8 Style

Recommendation

Fully managing enterprise risk means more than insuring against fire, floods and other hazards. Companies commonly have many uninsured exposures to loss from tougher competition, rapid technological change, financial instability and regulatory sanctions. That is why business leaders in growing numbers have adopted enterprise risk management (ERM), a flexible way to identify and respond to a corporation’s total range of risks. Not all risks are all bad. Some are worth taking. Firms that practice enterprise risk management can minimize their potential peril while taking their best calculated risks, the ones most likely to increase sales and profits. Enterprise risk management will not eliminate risk. It did not prevent the failures of major financial institutions during the 2008 crisis. But author John J. Hampton cogently upholds the practice, noting that a disciplined, detailed approach is critical to making ERM actually work. He favors a customizable model of risk management – including a central monitoring function – that can work for a company of any size. getAbstract recommends this book to business leaders seeking a more reliable way to identify each meaningful risk, to distinguish good risks from bad ones and to cover their downsides as much as possible.

In this summary, you will learn

  • How enterprise risk management (ERM) minimizes a business’s exposure to misfortune and maximizes its opportunities
  • How and why firms implement ERM systems
  • What types of risk management need a team approach
 

About the Author

John J. Hampton is professor of business and director of graduate business programs at St. Peter’s College. He is a former executive director of the Risk and Insurance Management Society.

 

Summary

Looking Beyond Insurance to Risk Management
Starting in the 1970s, companies expanded their risk management umbrella from insuring against hazards to launching internal loss-control initiatives, such as safety improvements at assembly plants to reduce workplace accidents. Some companies...

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