Value is maximized when management sets objectives to strike an optimal balance between growth and related risks, and effectively deploys resources in pursuit of the institution’s objectives. Uncertainty presents both risk and opportunity, with the potential to erode or enhance value. All institutions face uncertainty, and the challenge for management is to determine how much uncertainty the institution is prepared to accept as it strives to grow stakeholder value. Such value is based on the quality of service delivery to the citizens.
/businessman-and-employee-discussing-in-modern-factory-962632332-d5dfc2bf538740ee828aa4eeb4c58478.jpg "risk manager description")
The underlying premise of risk management is that every governmental body exists to provide value for its stakeholders. ERM is therefore recognized as an integral part of sound organizational management and is being promoted internationally and in South Africa as good practice applicable not to only in private sector, but also across the public sector spectrum, and this has been legislated as alluded to above. It is the process whereby an institution both methodically and intuitively addresses the risk attached to its activities with the goal of achieving sustained benefit within each activity and across the portfolio of activities. 56 of 2003, the Municipality has established a risk management unit within the office of the Municipality.Įnterprise Risk Management (ERM) forms a critical part of any institution’s strategic management.
In compliance with Section 62 (1) (c) (i) of the Municipal Finance Management Act (MFMA) No.
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