As regulators around the world debate systemic risk – focusing on the risk/reward proposition of market activity on the economic system – enterprises are increasingly focusing on managing enterprise risk and satisfying shareholder concerns that their investments are safe.
Modern enterprises have evolved into complex systems of smaller, separate corporations and/or business units located in multiple jurisdictions, related through ownership, operations and brand. Each entity has differing objectives, differing incentives and differing risk/reward propositions creating complex enterprise risk positions. When evaluating an enterprises risk portfolio, it is not appropriate to simply take the sum of each risk. Certain sets of risks can create a natural hedge, complementing each other. Other risks – especially those involving regulatory risk – can compound current risks to intolerable levels.
Leaders across the enterprise need to be agile thinkers that evaluate risk from the enterprises point of view. They should not only be aware of the risk appetite of their enterprise, but also of the role that their business unit plays in satisfying that appetite. Answers are not as straight forward as “is this risk in line with our enterprises aggregate risk,” but rather is dependent on the risk position of each business unit in the enterprise. Critical questions need to be addressed such as: how will this impact other business units’ risk position? Does it complement or compound the risk position of other business units? What is the size of the unit activities relative to size of the enterprise? What is the risk appetite of our shareholders? What is the best and worst possible outcome? How does it add to the net positive outcome for the enterprises? Taking an enterprise-wide view of risk requires insight into each business entity’s risk position.
Every action in business has a risk element; the willingness to take calculated risks and take decisive action is required of modern enterprise leaders. It is the responsibility of modern enterprises to support agile enterprise wide thinking when calculating risk and a key tool required to achieve this is having a relevant, organized, accurate and consistent source of information that can provide an enterprise view.
Enterprises Data Management (EDM) solutions can provide rapid, timely and clean access to the information that enterprise leaders need to take decisive action in line with enterprise goals. EDM solution also support risk management reporting and provide assurance to shareholders that their investment is in line with their own risk positions.
Join ZE as ZE PowerGroup hosts its Enterprise Data Management (EDM) to support Enterprise Risk Management (ERM) conference on October 4-5, 2011 in Vancouver, BC, Canada.
This conference entails detailed discussion on identification, categorization, storage, access utilization, analyses, reporting and business automation considerations in enterprise data management to support trade and risk management in energy and commodities.
Learn more about the upcoming event at http://www.zema.global/events.