In its 2012 Report to the Nations, the Association of Certified Fraud Examiners (ACFE) found that organizations typically lose five percent of their revenue to fraud each year. Even more frightening is this statistic from that report: the medium loss of survey respondents was $140,000. Over one-fifth of the losses studied exceeded $1 million. Small-to-medium sized businesses are often fraud targets because they lack anti-fraud controls. The smallest organizations in the ACFE study suffered the largest median losses.
Strategic Risks are risks that affect or are created by an organization's business strategy and strategic objectives. For companies that are committed to thoughtfully managing risk, strategic risk is not a new concept. However, with social media and the speed in which everything happens these days, strategic risks are becoming a high priority for senior leaders. In a recent study released by Deloitte, 81% of companies surveyed now explicitly manage strategic risks, rather than simply focusing on more traditional risk areas, such as operational, compliance and financial risks.
The world economy is becoming even more global and with that, exposure to risks posed to employees traveling abroad continues to grow; thus it becomes ever more apparent that any company should take a more 3-dimensional approach to risk. This means that as your employees travel abroad in order to bring in more business, Senior Management must also consider how they [employees] are protected.
The Risk and Insurance Management Society has been discussing the benefits of Enterprise Risk Management (ERM) for over 10 years now. In addition, they have developed the discipline of Strategic Risk Management (SRM) within the courses and material they publish. To them, ERM seeks to dial down the volatility in the operations of any organization, while SRM is meant to evaluate whether the company’s business strategy on risk is appropriate and provides long term sustainability of the company’s profits. Thus, if implemented correctly, ERM allows SRM to take a critical and impartial view on the way the company does business and mitigates risk.