european journal of social sciences issn: 1450-2267 - EuroJournals

European Journal of Social Sciences – Volume 5, Number 3 (2007)
3.2. Best Practice Framework to ERM
A best practice framework sets out the areas where best practices would be expected to be of common
interest to a variety of organizations. This framework was developed jointly with KPMG to be used as
well in its international study. The basic assumption is that an organization invests resources in
managing its risks, both strategic and operational, in order to achieve anticipated benefits. These
benefits, which are often defined as objectives for managing risk could be any combination of:
• Communication for commitment;
• Enhancement of stakeholder value, achievement of corporate objectives;
• Measurement for improved management;
• Support for effective accountability and governance;
• Strengthening of planning and decision processes (synergy, communications, etc.);
• Measurable returns on investments; and,
• Increased confidence of stakeholders.
The authors continued their research of current trends and best practices in ERM with case
studies of several organizations: Hydro-Quebec, Bradford & Bingley Building Society, Australian
Communications Company, Clarica Life Insurance, KeyCorp, Infineon Technologies AG, Holcim Ltd.,
and Wal-Mart Stores, Inc. Although these organizations have much in common, ranging from
corporate philosophy to corporate structure, the level of success with ERM implementation is varied.
Interviews with leading organizations in ERM and literature reviews helped the authors identify
several key success factors for ERM. According to the results of this research, ERM efforts are more
successful when there is strong and visible support from senior management and dedicated crossfunctional
staff to drive ERM implementation and push it into operation. Most executives interviewed
stressed the importance of linking ERM objectives to the key financial and strategic objectives of the
organization and to the business-planning process. In addition, those interviewed suggested introducing
ERM as an enhancement to already entrenched and well-accepted processes, rather than as a new
stand-alone procedure, and then proceeding incrementally to avoid great internal resistance.
4. Determining of ERM Best Practice Criterias
Many book, research and reports published about ERM concept and its conceptual framework. Also,
many survey accomplished about various sectors and industries. But, any study doesn’t exist to air
transportation sector and airports. For this reason, this article will help and support related to newly
raising and growing ERM efforts in the airport business across the world. In this study, best practices
criterias are determined by these ERM best practice surveys, guidelines, frameworks, case studies and
ERM implementation studies are analyzed. They are considered in the 3 main gorups. They are;
i. Strategic best practice criterias
• Developing and Establish to ERM vision, mission and strategy
• Integration of ERM into other management practices and management functions
• Creating and Promoting an ERM culture and common language Developing
organizational ERM policy and prosedures
• Achievement to Corporate Risk Optimization
ii. Operational best practice criterias
• Determining corporate risk appetite and tolerance line; creating corporate risk profile
• Establishing open communication and feedback systems
• Establish ERM information system
• Setting up ERM function and committee
• Setting Up an ERM framework for all aspects of corporate-based risks
• Overall enterprise risk assessment and analysis, enterprise risk mapping and
prioritization
66