ERM and business objectives

The purpose of enterprise risk management is to create and protect value, usually measured in terms of your organisation’s objectives. This is important because thinking clearly about value and objectives underpins most of what you do with enterprise risk management. Objectives help you understand whether a risk matters and how much priority you should give it. This chapter describes the links between the high-level purpose of your organisation and its business objectives and how to express your objectives in terms of impact criteria in a form that is useful for enterprise risk management. It then discusses quantitative and qualitative metrics you can use to measure whether you are achieving your objectives and shows examples of impact criteria and metrics from case studies. It also illustrates how the relationships between objectives can be shown in an influence diagram. This material provides the basis for the discussion about risk appetite in Chapter 4 .