Certified Supply Chain Professional (CSCP) Practice Exam

What is the main purpose of the COSO ERM framework?

1. To streamline operational processes

2. To sell risk management certifications

3. To identify risk events and manage organizational risk

4. To create financial accountability

The correct answer is: To identify risk events and manage organizational risk

The main purpose of the COSO ERM (Committee of Sponsoring Organizations of the Treadway Commission Enterprise Risk Management) framework is centered on the identification and management of risk events that can impact an organization’s objectives. This framework provides a structured approach to assess risk, thereby enabling organizations to understand potential threats and opportunities that could affect their performance and strategic goals. By implementing the COSO ERM framework, companies can enhance their ability to foresee risks and incorporate risk management processes into their decision-making, ultimately improving their overall governance and operational efficiency. The framework emphasizes that risk management should not be a standalone function but integrated into the organization's overall strategy and operations. This focus on identifying risk events and managing organizational risk differentiates this option from the others. Streamlining operational processes may be a byproduct of effective risk management, but it is not the main aim of the COSO ERM framework. Additionally, selling certifications is unrelated to the objectives of this framework. Financial accountability, while important, does not encompass the comprehensive risk management focus that COSO ERM provides. Thus, the correct answer emphasizes the overarching goal of risk identification and management within the enterprise context.