The Unseen predator

As I talked about ERM earlier, it is the system that it takes care about all the risk such as internal and outside risks. Moreover, ERM finds the cause of the risks, amount of the losses, and find out the solutions for those losses of the risks. However, according to Risk Management magazine, many firms did not apply ERM system. The reason is the firms should spend money for build ERM systems, and the firms felt like that is not worth it. However, ruin of Enron makes the firms to consider the ERM should be the essential part of the firms. I think if firms did not catch their risks at the beginning, the risks would get riskier, and to recover firms from riskier problems, the firms should spend a lot of money or they would be faced with bankruptcy. There is a critical point of ERM; some risk managers started to educate the how ERM works, but it was hard to learn because there are no certain manuals on setting ERM and also, ERM is too broad. Thus, many risk managers were struggling to work on that. Many people think the job of risk management as a maintain firms’ profits, and they think CEO as take care of all firms’ risks. I partially agree that risk managers maintain firms’ profits, but they actually try to maximize firms’ profits. Some people did not even know whether each firm has a Chief Risk Officer. Through the historical data, risk managers warned the economic gets worse when the bubble economics pops. Therefore, majority people in industry are aware of importance of risk management compared to 20th century.

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