Enterprise Risk Management

Enterprise risk management – or ERM – is the study of how to manage risk for an enterprise as a whole. This means understanding not only the range of risks that an institution faces, but how they inter-react. It also implies the use of a framework within which risk is managed, as well as certain structures an processes.

ERM forms the basis for one of the specialist technical examinations, ST9, set by the Institute and Faculty of Actuaries. I wrote the book, “Financial Enterprise Risk Management” [amazon link to 2nd ed] on which much of the examination is based. The book contains questions at the end of each chapter, but I have included some additional tests here to help students prepare for their examinations.

01Introduction to ERM

Basic principles of ERM, key concepts & framework for risk management

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02External Risk Frameworks

Regulatory risk frameworks & approaches by credit rating agencies

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03The ERM Process

Stakeholders, risk appetite & risk management process

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04Risk Classification

Different concepts of risk & risks faced by organisations

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05Risk Measurement

Definition & calculation of various risk measures

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06Introduction to Risk Modelling

Quantification of risk, measures of correlation & modelling approaches

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07Quantitative Analysis of Financial Data

Analysis of data, and the selection & use of copulas

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08Further Risk Modelling

Tail risk & extreme value theory

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09Analysis of Different Types of Risk

Assessment of market, credit & other risks

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10Risk Optimisation and Responses to Risk

Optimise relative to an objective, & the various responses to risk

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11Risk Mitigation

How to manage market, credit and other risks

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12Capital Management

Economic value & economic capital

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