Enterprise Risk Identification

Overview

The first step in enterprise risk management is risk identification. That is, the firm should brainstorm a list of the risk that it faces in order to create a framework for addressing those risks.

As a general rule, there is a list of risk that most firms face and can provide a basic outline of an individual firm's risks. However, the firm should strive to identify the risks that are unique to itself, and to provide a process for escalating risks as they are identified.

Operational Risk

One of the primary risks faced by all companies is operational risk. The following represent a common lisk of risks that are seen to fall under the operational risk category.

• Legal Risk
• Reputation Risk
• Execution Risk
• IT Risk

Modeling Operational Risk : Operational risks are notoriously hard to model. Nevertheless, there have been attempts to put some kind of framewo

Product Firm Risks

• Supply Chain Risk
• Liquidity Risk : liquidity risk is the risk that the firm will face a payment due to a creditor, but have all its assets locked up in non-liquid assets, ones that cannot typically be used to pay a debt.

Financial Firm Risks

• Liquidity Risk : liquidity risk is the risk that the firm will face a payment due to a creditor, but have all its assets locked up in non-liquid assets, ones that cannot typically be used to pay a debt.