Research TD Ameritrade Enterprise Risk Management

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TD Ameritrade Enterprise Risk Management
Introduction
About 50% of market capitalization companies surprisingly decline each year or lose their competitive position in the market. It has been established that the main cause of these disastrous declines is lies on the operational and strategic risks, in fact accounting 80% of the total corporate falls. However, it has been determined that most of these consequences could be mitigated through a comprehensive enterprise risk management (ERM). ERM is the process of planning, organizing, leading and controlling the performance of a business to mitigate the effects of risk on a firm's capital and income. ERM is comprehensive and goes beyond mitigating the risks associated with accidental losses into cushioning against financial, operational, strategic and other potential risks to the business. TD Ameritrade is an online broker company that has taken an initiative in establishing an ERM to prevent its capitalization of the market from an unanticipated decline now and in future. TD Ameritrade's ERM aims at allowing the executive to mitigate risks effectively while increasing the company's competitive advantage. It shall achieve this by helping the executive management to assess enterprise risk areas, develop enterprise risk management strategies, and address risk problems. TD Ameritrade's ERM implementation plan involves various project teams playing different roles and covers a wide range of risk areas.
Implementation Plan
Organizations will establish an ERM with the aim of preventing declines due to operational or strategic risks. However, there is no magical bullet on implementing an ERM program. At TD Ameritrade, the ERM implementation plan is largely influenced by the pursuit of the perceived gains from the program. ERM cannot be measured using traditional business metrics such a return on capital, return on assets and return on investment, and for this reason, TD Ameritrade implements ERM with the perspective of the shareholder value, clients, and associates. ERM has been implemented to meet the value the organization was trying to meet and protect which is adding more value to shareholders through more profit creation. The business chief manager at the company believes that doing what is right and in the best interest of the shareholders, clients and associates as a business strategy can make the company successful.
TD Ameritrade established ERM in 2001 with the aim of expanding risk management across all the organizational departments, the organizations and the entire business units so that one risk management language would be established across the business premises. TD Ameritrade began with establishing a COSO-based, risk-based internal audit function. The COSO-based was expanded throughout the business to support an ERM program and risk evaluation process backed by full support from the executive management of the business. Once an internal risk evaluation had been established and expanded to the entire business, a corporate risk office was established to undertake the ERM. The overall structure of TD Ameritrade ERM's program is an integration of the corporate risk committee which is composed of the executive commi...