Plan to Implement Enterprise Risk Management

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The response addresses the queries posted in 1809 words with references.

//The given discussion paper is based on the enterprise risk management. For this purpose, a plan is developed for the particular organization named Happy Toys. Prior to developing the plan, it is better to make the user understand what the concept of enterprise risk management is. The description of the committee made for this plan is also discussed in the given discussion paper.//

Enterprise Risk Management Plan for Happy Toys

Enterprise Risk Management (ERM) is an approach to manage risks in the business environment. This approach aims to incorporate the different concept of strategic planning, operations management and internal control into corporate strategy. This management approach develops methods and activities, which are utilized by firms to successfully manage risks and grab opportunities, which would help them for the accomplishment of their objectives. ERM helps in formulating strategy for risk management. This involves identifying risks and opportunities, which would affect the organization's objectives, evaluating their impact, making a strategy to counter it and overseeing its implementation.

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) was formulated in 1985 to explore and make a report on making integrated frameworks of internal corporate control. The report made by COSCO was completed in 1994. This report gave a definition of internal control and rendered a framework for evaluation and improvement of internal control systems. In 2001, COSO formulated a framework that can be used by organizations for assessing and improving their enterprise risk management strategy. This COSCO framework gave eight components for effective management of enterprise risk. These eight components are internal environment, objective setting, event identification, risk assessment, risk response, control activities, information, communication and monitoring. In addition to this, COSCO has given four objectives, categories namely strategy, operations, financial reporting and compliance.

In this paper, a plan is proposed for Happy Toys for implementing enterprise risk management (ERM).

//Before providing the recommendations of COSO for the Happy Toys Company, it is better to understand the background of the company and its concept. In the same series, in this section of discussion, I am describing the concept of the company in detail.//

COSO Recommendations

Happy Toys is a small corporation which is into manufacturing of Toys for the children. The company is based in Chicago. The company is growing at a very fast pace. The company wants to double its growth in the future. Happy Toys want to implement an enterprise risk management strategy based on the COSO recommendations. The application of eight components mentioned in Committee of Sponsoring Organizations of the Treadway Commission recommendation is less structured and formal in midsize and small scale companies. Since Happy Toys is a small scale ...