Enterprise Risk Management: Improving Embedded Risk Management and Risk Governance
All strategic and operational decisions should consider risk‑adjusted earnings value, as all management inherently involves risk management. Effective risk management requires skilled personnel and a robust system to analyze, monitor, and manage risks, focusing on seven key areas: decision‑oriented risk management, value‑oriented corporate management, risk quantification (including economic, geopolitical, and sustainability risks), and risk aggregation using Monte Carlo simulations. A strong corporate strategy ensures financial sustainability and manageable earnings risks, while embedded risk management enables employees to address risks. These areas, underexplored in literature, warrant further attention, particularly risk aggregation through simulation methods.