Best practices.

• Author: Heffes, Ellen M.
• Position: ENTERPRISE RISK - Brief article

A midst the subprime crisis and downturning economy, it can be difficult for some businesses to determine their bottom line.

Without guiding principles, they may be at a perilous crossroad in defining and managing risks; instead, they may over-mitigate risks, underestimate risk exposures or altogether miss opportunities to capitalize on risks.

Best practices from leading actuaries, in partnership with the Society of Actuaries, have developed five principles for evaluating enterprise risk management investments:

* Qualified leader. Without proper guidance, training and leadership from a skilled risk professional, attempting to navigate risks is futile. Since risks cut across an entire organization, the first step is to ensure that disparate departments offer full consensus about the organization's risks.

* Clear communication. ERM processes that do not lead to the translation of highly complex and technical issues cannot arrive at actionable information to make smarter, more confident decisions. Thus, it is important that they have...