Traditionally, risk management is segmented and conducted in separate business units or departments (i.e., silos) within a company. Under silo-based risk management, silos deal with their own risks, and none single group or person in the company has a grasp of the entire exposure that the company faces. This is attributed to the way people think about solving problems, the existing organizational structure, and the evolution of risk management practice. In addition, this is due to the fact that each silo within a company possesses the best expertise to address the risks within its area of responsibility.
In recent years, a paradigm shift has occurred in the way companies view risk management, and the trend has moved towards a holistic view of risk management. As the fundamental paradigm in this trend, enterprise risk management (ERM) has attracted much worldwide attention.
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