COSO ERM Framework

The COSO ERM Framework, developed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), provides a comprehensive and integrated approach to enterprise risk management (ERM). It was first published in 2004 and updated in 2017 to reflect changes in the business environment, emerging risks, and evolving best practices.

Components:

The COSO ERM Framework consists of eight interrelated components, which collectively form the basis for effective ERM implementation:

· Internal Environment: This component sets the tone for an organization’s risk management culture. It includes factors such as management’s risk philosophy, commitment to ethical values, and the overall governance structure.

· Objective Setting: Objectives serve as the foundation for ERM, guiding risk management activities to support the organization’s strategic goals. Clear and well-defined objectives enable organizations to identify and prioritize risks effectively.

· Event Identification: Organizations identify potential events that may affect the achievement of their objectives. Events can be either internal or external and may present opportunities or pose risks to the organization.

· Risk Assessment: This component involves evaluating the impact and likelihood of identified risks on the…