ERM Concepts [13]

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Bullet points include: ERM should give an enterprise-wide risk picture, including. Risks, risk concentrations and risk diversifications. But having a full picture can be very costly and complex to achieve. Often involves major multi-year change programmes and IT spend. Proponents argue that gains in reduced losses and reduced volatility more than outweigh these costs. Examples from Lam (2003) include: Large P&C insurer saved $40m in costs or 13% of annual reinsurance premium. Top money centre bank that focused on ERM out-performed S&P 500 banks by 58% in stock price performance

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