COSO Enterprise Risk Management: Understanding the New Integrated ERM Framework

Chapter 4. COSO ERM Organizational Objectives

This chapter discusses the other two dimensions of the Committee of Sponsoring Organizations’ enterprise risk management (COSO ERM) framework: its objective categories and the business unit through entity-level risks in the framework. The discussion here covers the other two dimensions of the COSO ERM framework in conjunction with the internal environment through monitoring risk components described in Chapter 3 and the ERM framework diagram shown in Exhibit 3.1. This chapter will again reference our hypothetical example company, Global Computer Products, which was introduced in Chapter 3. A basic concept behind COSO ERM is that enterprise management, at all levels, should take a portfolio view of risk—how the various individual risks that a unit manager or the overall organization may face will interrelate with other risks impacting the organization.

An understanding of this overall COSO ERM framework should help managers at any level in the organization to better understand, accept, or manage the various risks they face in the course of day-to-day operations. For example, an organization launching a new product line should recognize all of the risks associated with that product line launch in terms of all three dimensions of the COSO ERM framework.

ERM Risk Objective Categories

Chapter 3 introduced eight COSO ERM components, ranging from the internal environment to risk monitoring. Each component was discussed in terms of its relationships ...