Conventional ERM systems are generally assessment based and, consequently, they typically report results via an assessment metric often based on three colors: red, amber, and green. The managerial usefulness of such systems is limited for a number of reasons: first, “assessment” as opposed to “measurement” is inherently subjective and not easily audited; second, an assessment metric cannot be aggregated to support important management techniques such as trend analysis, bench-marking, and ranking, and the comparison of actual usage against operating limits. To state the obvious, you can’t aggregate and compare colors…
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