What is a defining feature of Enterprise Risk Management (ERM)?

A defining feature of Enterprise Risk Management (ERM) is its cross-functional treatment of risk across the organization. This approach differs from traditional risk management by emphasizing the integration of risk management processes into all aspects of an organization’s operations and decision-making. By examining risks from various departments and perspectives, ERM provides a holistic view that helps organizations anticipate potential risks and opportunities that could affect their strategic objectives.

This broad perspective encourages collaboration among different units, ensuring that risks are identified and managed proactively rather than in silos. It allows organizations to leverage information and insights from various functional areas, ultimately enhancing the agility and resilience of the organization against uncertainties.

In contrast to the other options, which do not encompass the comprehensive approach of ERM, the focus on pure risk, delegation of risk, or reactive management are limited perspectives that fail to address the interconnected nature of risks in an organizational context.