Enterprise Risk Management (ERM) has evolved from a traditional risk register to a strategic management tool. Today, risks are no longer recorded in isolation, but assessed in the context of the business model, reputation, capital markets, and directors’ and officers’ liability. ERM is therefore a central component of modern corporate governance, and this is precisely where corporate resilience begins.
According to a global survey of risk managers, cyber attacks, IT failures and data loss are by far the biggest risks for companies. Increasing regulatory requirements, ESG requirements, AI regulation and geopolitical uncertainties are increasing the legal pressure to act. ERM is becoming the interface between strategy and law, while legal departments are evolving from reactive advisors to strategic risk architects.
What is Enterprise Risk Management (ERM)?
Enterprise Risk Management (ERM) refers to a holistic approach to identifying, assessing, managing and monitoring all company-relevant risks of a strategic, operational, financial and regulatory nature.
In contrast to the isolated risk management of individual functions, ERM pursues a company-wide approach. The framework of the Committee of Sponsoring Organizations of the Treadway Commission (COSO), which defines ERM as an integral part of corporate management, is internationally recognized.
Legal dimension:
For Legal, ERM means the systematic recording and control of:
ERM is therefore a central component of the duties of the executive bodies.
How the ERM Process Works
Enterprise Risk Management has evolved from a traditional risk register to a strategic management tool. Legal departments and general counsel are taking center stage because many key corporate risks are of a regulatory and liability nature. Boards expect transparent, robust risk analyses in order to fulfill their monitoring and fiduciary obligations.
The main drivers include:
Frameworks and Components
Numerous internationally recognized frameworks structure Enterprise Risk Management and define recognized standards for governance, control and reporting. An overview of the most important ERM frameworks and their central components:
| Framework | Publisher | Focus | Relevance for Legal |
| Committee of Sponsoring Organizations of the Treadway Commission (COSO ERM) | US Commission of experts | Integration of risk in strategy, performance and internal control | Strong governance and control orientation; important for board liability and board reporting |
| International Organization for Standardization (ISO 31000) | International Standards Organization | Principles-based, global risk management standard | International connectivity; relevant for global compliance structures |
| Institute of Internal Auditors (IIA) | Professional Association of Internal Auditors | Assurance, control systems and risk assessment | Focus on internal control systems (ICS) and monitoring processes |
Key ERM Frameworks and Their Components
Governance and control components are particularly crucial for legal departments, as they are directly linked to liability issues, documentation obligations and the safeguarding of board decisions.
Legal’s Strategic Role in Enterprise Risk Management
The role of Legal is shifting from reactive consulting to strategic risk management.
Increasing Regulatory Requirements
EU regulations, supply chain laws, data protection and financial market supervision significantly increase fines and liability risks. According to PwC’s Global Compliance Survey 2025, 85% of companies see compliance requirements as increasingly complex. In addition, around 1,500 new legal acts are issued in the EU every year. Companies must proactively monitor these developments and integrate them into internal processes.
ESG requirements are no longer just a marketing issue. Inaccurate or incomplete disclosures can have significant legal, financial and reputational consequences:
Legal must ensure risk transparency and implement robust processes.
Liability Risks (Management & Board)
The liability of the management board and supervisory bodies increases. A lack of risk monitoring can be seen as a breach of duty. ERM provides protection by systematically recording, evaluating and comprehensibly documenting risks.
International Compliance
Global companies face different legal systems, from data protection to sanctions. Legal ensures that compliance standards are observed worldwide and risks are managed at an early stage.
Documentation and Verification Obligations
Regulators require comprehensible risk analyses. If the documentation is missing, the measure is effectively deemed not to have been carried out. Legal ensures that all risks are recorded in an audit-proof manner and managed in a verifiable manner.
Transparency requirements of the Board
Supervisory bodies demand data-based risk reports. Legal must make legal risks quantifiable.
The Biggest Corporate Risks in 2025 and What They Mean for Legal
In 2025, companies will be faced with a complex risk landscape that brings with it not only operational but also legal challenges. For Legal, this means that risks must not only be identified, but also legally assessed, documented and made manageable.
Cyber Incidents
Cyber attacks affect data protection, reporting obligations and liability towards customers. Legal departments must ensure that incident response plans are legally compliant and that potential liability risks are minimized.
AI Risks
The use of artificial intelligence raises new legal issues: Liability for decisions, discrimination risks and transparency obligations. Legal must implement governance structures and guidelines to safeguard against risks at an early stage.
Business Disruption and Geopolitical Risks
Supply chain disruptions, sanctions or political crises can affect contracts, export controls and insurance. Legal manages these risks through preventive contract design and compliance with regulatory requirements.
What Is Integrated Risk Management (IRM)?
Integrated Risk Management (IRM) is the further development of classic Enterprise Risk Management. It combines risk, compliance and audit systems in a central platform so that risks can be recorded, assessed, managed and monitored uniformly throughout the company. IRM not only enables more efficient reporting, but also better traceability and a consistent basis for decision-making for the Management Board, Supervisory Board and management.
Why Risk Silos No Longer Work
Separate systems and isolated risk management processes often lead to a loss of information, inconsistent documentation and delayed escalation of critical risks. This is particularly problematic for Legal, as liability issues, regulatory obligations and board transparency can only be reliably addressed if all sources of risk are considered in an integrated manner. IRM creates this integrated view, enables coordinated action across departmental boundaries and ensures that risks are managed and documented in a legally compliant manner.
How Cloud and AI Are Transforming Risk Management
Cloud technology and artificial intelligence (AI) are revolutionizing risk management by making processes more efficient, data-driven and transparent. Cloud-based platforms enable the central recording, analysis and visualization of risks across company divisions, breaking down silos and enabling real-time reporting.
AI supports automated risk detection, for example through pattern analysis in large amounts of data, early warning systems for regulatory changes or predictions of cyber and business interruption risks.
Modern AI tools such as DiliTrust’s Risk Detector automate the analysis of legal documents: they automatically identify risky clauses, apply internal compliance rules and suggest compliant alternatives in minutes rather than hours. These technologies not only improve efficiency and reaction speed in contract and risk management, but also strengthen the legal security and verifiability of decisions.
The Future of ERM: From Compliance to Strategic Management
Enterprise Risk Management is increasingly developing from a pure compliance function into a strategic management tool. ERM is no longer only used for risk control, but also provides a valuable decision-making basis for the Board of Directors and management, for example for investments, growth strategies or international expansions. For Legal, this means that the department is moving from being a reactive advisor to a proactive risk architect. It not only assesses legal risks, but also integrates them into strategic decisions, ensures that governance and compliance requirements are met and documents all measures in an audit-proof manner.
In the future, ERM will therefore become the interface between strategy, law and operational business: companies that manage risks holistically increase their resilience, protect their executive bodies from liability and create the basis for sustainable, legally compliant growth.
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