All organisations and indeed all people face risk to some degree and those risks are highly varied not only in their seriousness but also in their probability. The key to Enterprise Risk Management is recognising where there are existing risks and what impact the actualisation of a risk event would have on the organisation. Like individuals, enterprises need to understand the underlying culture and values of the organisation in order to understand not only the nature of risk but how it can be dealt with. There is always some kind of risk in an enterprise whether it is purely financial, linked with investing in new products in new markets, or the potential for something to go really wrong. A good example of this might be Richard Branson's Virgin Galactic programme where there is risk in all areas of development and execution.

This example is a rather more conservative one. In the case study, KPMG uses an example of an unnamed client company to illustrate the threats of not having an integrated risk management system. In many situations, a risk event arises because management has become complacent and fails to recognise what is happening in its external operating environment. In this case, the company has failed to recognise the threat from new market entrants who were using current technology to develop new products. As a result, the company realised that it was falling behind the competition and was in danger of failing. A close analysis of the company and its exposure to risk revealed the strategic direction that it should take to avert disaster.

The case study illustrates and explains all of the main aspects of continuous risk management and strategy implementation within an organisation.

Tutorial Discussion Points:

1. What were the key decisions regarding exposure to risk that the company had to address in order to survive?

2. Why would you think that it is important to have the risk management strategy embedded in all aspects of a successful enterprise?