12. Organizational Aspects of Enterprise Risk Management

This chapter delves into the organizational aspects of Enterprise Risk Management (ERM), focusing on the concept of risk governance and the objectives and design principles of ERM organization. It explores the roles and responsibilities of key actors in corporate ERM, including the supervisory board, top management, and decentralized risk owners. The chapter also examines the main impact factors on ERM in organizations and distinguishes between different tasks and roles in ERM. A significant focus is placed on the three lines of defense concept, which outlines the cooperation and independence of relevant ERM functions. Additionally, the chapter discusses the benefits and problems associated with different ERM maturity models, providing a comprehensive overview of the various levels of ERM implementation. The chapter concludes by highlighting the importance of effective risk governance in reducing agency problems related to risk management and ensuring the stability and flexibility of corporate risk management. By reading this chapter, professionals will gain valuable insights into the organizational structure and process organization of ERM, the roles of risk managers, and the integration of ERM with management accounting. The chapter also provides practical examples and case studies, such as the ERM organization at the Lufthansa Group and the Mercedes-Benz Group, to illustrate the concepts and principles discussed. Overall, this chapter offers a detailed and engaging exploration of the organizational aspects of ERM, making it an essential resource for professionals seeking to enhance their understanding of risk management in corporate practice.