Enterprise Risk Management and the PMBOK - PM Hut

Enterprise Risk Management is a term used to describe a holistic approach to managing the risks and opportunities that the organization must manage intelligently in order to create maximum value for their shareholders. The foundation for the approach is the alignment of the organization’s management of risks and opportunities to their goals and objectives. One of the keys to this alignment is the “Risk Appetite” statement which is a statement encapsulating the direction the Board gives management to guide their risk management methods. The statement should describe in general terms what kinds of risk the organization can tolerate and which it can’t. This statement plus the organization’s goals and objectives guides management in the selection of projects the organization undertakes. The statement also guides management in setting risk tolerance levels and determining which risks are acceptable and which must be mitigated.

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Enterprise Risk Management and the PMBOK - PM Hut