The Development Of Enterprise Risk Management Essay

1.3 The Development of Enterprise Risk Management This section will briefly discuss the development of ERM especially the emerging factors that influence companies to shift from TRM to ERM. The researchers will discuss both the academic literature and the role of professional. (D Arcy, 2001) proposed that the origin of risk management was developed by a group of innovative insurance professors Robert I. Mehr and Bob Hedges in 1950s . The objective of risk management at that time was to maximize the productive efficiency of the enterprise. At that time, risk management was specifically focused on pure risk and speculative risks. According to (Skipper Kwon, 2007) , in the 1970s, when the Organization of Petroleum Exporting Countries decided to reduce production in order to increase the price, financial risk management became an interesting issue highlighted by firms because the increment in oil price has affected the stability of exchange rates and the inflation rate . Later in 1980s, political risks attracted more attention from multinational corporations as a result of different political regimes in different countries. For example, when the government announced a new policy, investors and corporations must make decisions to reduce political risk (Skipper Kwon, 2007). According to (D Arcy, 2001) during that era, organizations did not properly apply risk management because they did not apply the risk management tools and techniques such as options. Therefore, the costShow MoreRelatedEnterprise Risk Management ( Erm )1531 Words   |  7 Pagesabout the Enterprise Risk Management (ERM). How much risk can be taken so that gain can be increase as risk is directly associated with gain Answer 1: Enterprise Risk Management (ERM) has great potential to provide organizations with new competitive advantages. 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