COSO has released an exposure draft of its recently updated 2004 Enterprise Risk Management – Integrated Framework and seeks your comments and feedback on this important revision. The proposed updated framework is titled Enterprise Risk Management – Aligning Risk with Strategy and Performance. The comment deadline is September 30, 2016.
I am serving on the Advisory Council that has assisted the COSO Board with this revision project, which began in early 2015. I am impressed with the diligence and rigor COSO has exhibited in their efforts to refresh this important principles-based framework. Input has been received from hundreds of business and risk professionals, individuals serving on boards of directors and in senior management positions, academics, and government representatives around the world.
COSO has taken a holistic approach to this update project by reexamining and revising the core definition of ERM and the core components of enterprise risk management. And, as suggested by the new Framework title, this revision significantly emphasizes the important intersection of ERM with strategy and entity performance. One of the most notable changes is the introduction of 23 core Principles that align to five core components of effective ERM. In my view, this principles-based approach provides a clearer path for boards of directors and senior executives to design and implement an effective ERM process that strengthens the organization’s ability to protect and create enterprise value.
The usefulness of this framework revision will be enhanced by comments and feedback provided by key business leaders and risk professionals. I encourage you to review the updated framework and to submit your thoughts and suggestions to COSO by the comment deadline.
COSO has created a website that contains links to the exposure draft and to other important information, including a document containing responses to frequently asked questions (FAQs). View the Exposure Draft now.
Deloitte Professor of ERM and Director of the ERM Initiative
Poole College of Management, North Carolina State University