Better Tools Needed for ERM (Journal of Accountancy)

Current risk management processes are ‘primitive’ and companies’ efforts to quantify their risks are limited.

While many companies have adopted enterprise risk management, current ERM processes are “primitive,” according to an article in the Journal of Accountancy by Kenneth Merchant, chair of accountancy at UCLA.

Companies aren’t good at weighing good risks and most cannot quantify their risk appetite. The basic problem is that humans are limited in their ability to conjecture about things that have yet to occur.

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