Enterprise Risk Management (ERM) is characterized by identification and assessment (C) of risks across the organization. At the SPHR level, ERM is understood as a holistic, proactive approach to managing risk rather than a reactive or insurance-based model.

ERM focuses on systematically identifying potential risks—strategic, operational, financial, compliance, and reputational—and assessing their likelihood and impact. This enables leadership to prioritize risks, allocate resources appropriately, and integrate risk considerations into strategic decision-making.

Reliability and loss ratio (B) are insurance metrics, not ERM characteristics. Insurance and damage control (D) represent traditional risk mitigation tools, not the defining features of ERM. Projection and analysis (A) may be techniques used within ERM but do not capture its core purpose.

SPHR exam content emphasizes that ERM is embedded into governance, strategy, and performance management, making risk awareness an enterprise-wide responsibility.

References :

HRCI SPHR Exam Content Outline — Functional Area: Leadership and Strategy (enterprise risk management).

HRCI SPHR Study Guide — ERM frameworks and organizational application.

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