Enterprise risk management

Risk management for the globally integrated enterprise

As IBM pursues major growth opportunities—as we open new offices, hire new employees, establish new relationships with customers and business partners—risks are inherent. To assure these risks are identified and handled appropriately throughout the enterprise, IBM has developed a consistent, systemic and fully integrated approach to Enterprise Risk Management (ERM). Using a clearly defined risk assessment methodology and risk management metrics, we identify, define and prioritize risks, analyze their causes, and assess for possible enterprise-level implications. This approach helps us determine how best to manage and mitigate risks to help us drive consistent growth and economic return long-term.

For instance, IBM continues to invest significantly in growth opportunities, including dozens of emerging countries, including Brazil, China, India and Russia, to drive revenue growth and market share gains. Client adoption rates and viable economic models are uncertain in these high-value and rapidly growing market segments. In addition, as our company expands to capture emerging growth opportunities, we need to rapidly secure the appropriate mix of trained, skilled and experienced personnel. The developing nature of emerging growth markets presents potential political, social and economic risks from inadequate infrastructure, creditworthiness of customers and business partners, labor disruption and corruption. This could impact our ability to meet our growth objectives and to deliver to our clients around the world.

The systematic approach to Enterprise Risk Management allows us to take advantage of the scale and scope of the company to improve performance through better identification and management of enterprise risk. It is designed to help IBM:

ensure strategic decisions are informed with appropriate consideration of risk
anticipate issues and prepare for them in the execution of strategy
analyze ongoing operations and take action to improve performance and increase consistency
monitor risks and feedback to the business more effectively

To further enhance our risk management capabilities, IBM recently established the role of vice president of financial management and chief financial risk officer whose purview includes Enterprise Risk Management.