 first is improved regulator, investor and rating confidence that if you install this ERM, then your rating agency will have your confidence, your investors will have your stake holders, shareholders and investors they will be much more comfortable with you, that this organization has a good risk management for example, you can say that there are two people who you can invest one is very well managed, document, one is very careless, not well documented, so you will follow simple answer is definitely the A person, the well organized same way if we talk about bigger picture, then you will also invest in such companies whose risk management structure is better than the one whose risk management is not how will you know if you have a proper system in place second reason is enhanced corporate governance corporate governance is very important and required, so ERM supports it and supplements it improved ability to respond to changing business demands because you know only thing constant in the world is change change is necessary, business environment will change, dynamics will change so ERM helps you cater to change in a better way ability to evaluate likelihood of an impact of major risk which are the risks, you can identify them, you can pre-assess their impact provide an integrated as opposed to silo approach silo approach what is it, silo is different from your box like you have seen the silo of wheat, one is the wheat box, the other is the other there is no relationship between these two, silo so even in organization if there is no link between the two then we say that silo is working, which is not recommended silo is opposite of integrated approach so we are more want something integrated or linked to know each other's systems in place as you remember we talked about in currency that we have to take $10,000 from one place and we have to give $8,000 from one place if there is no link between the two then it will be safeguarding the receivable it will be safeguarding the payable which is wrong, the need was only to safeguard $2,000 if they are connected and integrated so this ERM will help us in their integration promotes an open positive risk culture risk culture, risk awareness, this we will achieve that is why we need to have this thing determinants, Leven and Hort suggest that in the adoption of ERM we will depend on what are the factors to consider so first is firm size, what is the firm we are talking about and then earning volatility, how much are the earning levels vary and stock volatility, what kind of stock movement is there because these things are gauging us and they lead us to what kind of risk management we have to go to, what type of levels we need determinants what are they, average leveraging leverage means that how much you are working with your own funds how much your borrowed funds are because that is higher you borrow it makes you a little more risky and as the boring level higher removes high your risk level increases average book market value ratios, financial capacity what is yours, institutional ownership shareholding is with one person, it is spread percentage is concentrated, spread out so this pattern of shareholding we will know so these are determinants that tell us what kind of tools we have subsidiary countries, how many countries we are operating how many countries are functioning these are all determinants that will lead us to how to develop ERM policy indicator 5 factor have significant impact on firms to implement ER these are ERM's tools, ERM's drivers which we will take with us A risk officer, we talked about it earlier that it has a main tool, CRO, you can hire managerial support, it should be well supported it should not be that one person is identifying a risk so manager will give it specifically to you or why you are highlighting it so it should be if someone is identifying a risk that should be well accepted by management that should be discussed and then it should be addressed size of firm, auditor's role the good firms, big four firms or top level auditors when they go into audit process they also give specific weight and they are giving weight to this point that how is this organization's ERM so risk management structure is also being gauged and we are also commenting on it that how is this organization's structure their audit process is also being impacted and overall if an organization's system is very good then it may be that 5 out of 100 should be viewed or 3 documents should be viewed but the risk management system will be weak we will go there to see 40 out of 100 documents so you can see confidence difference 40 out of 40% should be viewed or 3% should be viewed or 5% should be viewed just because of your system this is a very good summary for example it will remove our confusion and also our point that it's not about financial risk so it's about strategic risk operation risk, finance risk one of the important one but not the only one HR, human capital, human resource risk IT risk, legal risk so all these factors we are addressing how to manage it so the course advocate what we are talking about is that ERM is very important to us we are strong advocates we have already justified its benefits we have said that its costs but its benefits are immense what will we get from it increased risk awareness effective decision making and what will be the ultimate thing bottom line profits increase and increase in the value of the firm that in brand image firm's value in share price we will see increase if you are following a proper risk management system the literature we read that very few enterprise from developing nature are into ERM this is a point of concern that developing countries like us and other small countries there ERM is not giving much weight that is why we have said that they will be asked why should we do it and in contrast the developed nation is following it and implementing it this gap is due to lack of awareness and its called for serious concern to value maximization of enterprise shareholder in developing nation so this is a big concern that the wealth of shareholder is not being safeguarded because of risk management there is not much focus when developed countries have worked a lot on this implementation as a type so this is your role in Pakistan that wherever you are working wherever you will be working in future you should take to risk culture ERM according to them this gap is due to lack of awareness so this is a call for serious concern that this is an alarming nature it needs to be taken care why is ERM important organization starts an interviewer to take business opportunity this uncertainty about organization will take opportunity or not so each interviewer has associate risk so this because ERM is important whatever project we take we see what will be the benefit what will be the loss informally so ERM needs to help out which venture should be taken which venture should not be taken this is a specific task so this helps us to address to help organization needs to increase their risk taking ability to cash on the opportunities to keep knocking at their door so we have different opportunities if we understand them we will capture them better so that we will not take risk ERM actually is braving you that you will get understanding supposedly you should ask an ordinary person that have you ever worked in derivatives or have you bought a share he will say no I don't know that is why I don't know so you see that he is not coming in this field in risk because he doesn't have understanding if ERM comes if ERM trains you guides you so you can tap that avenue so you can increase your horizon with this tool with robust ERM identify and analyze risk and decide which risk is worthy to take this project is a little risky but it has tools and factors so you can take that venture which you don't do ERM institutionalize risk management process in organization by standardizing the tool in this a methodology is made that what task will be how path will be taken this is important so that the impact of individual product failure in case happens I address appropriately this is also a normal thing that you will buy products some of them might fail as well so now the failure is also learning you have launched 10 products 8 are successful, 2 are not successful so rather than just think that those 2 are not going work is over, no ERM will probe them in great depth what was the reason for their failure maybe there are minor issues which can be addressed and relaunched so it will help you in future strategies as well importance of this is so much ERM is important because it will determine the health and life of business enterprise overall if your ERM is going on effective system organization will help business similarly there is a warning sign if organization fails to identify to its existence how it can affect us it will be ill prepared to face any risk event if we don't identify if it is actually incurred we will be losing out of it for example if you are in a place where there is a risk of data and you haven't done the measures you can lose all the data or even organization's functioning and survival similarly for example business enterprise recognized dependency on a sole supplier is a high risk for example you are taking raw material from an organization which is a good thing which is a good raw material deal high best possible rate ERM will say no it is not a very good structure because your over dependence if something happens to that supplier or if supplier do something bad that is going to impact you so ERM will say no take multiple sources even price is a bit higher you should not have all things brought from one supplier only possibly one supplier that's a different thing but otherwise ERM will suggest having more supply so this means its benefits are much more high thank you