Root Cause Analysis plays an important role in enterprise risk management. RCA is part of the risk assessment process designed to help an organization define causes to past or future risk events, understand the causes of those risk events and most importantly, prevent future risk events from happening.
The practice of RCA is predicated on the belief that problems are best solved by attempting to address, correct, or eliminate root causes, as opposed to merely addressing the immediately obvious symptoms. ERM provides a framework for risk management that typically involves identifying particular events of circumstances relevant to the organization’s strategic goals, assessing them in terms of likelihood and magnitude of financial impact to the organization, determining a response strategy, and monitoring risk information throughout the organization. By identifying and proactively addressing risks and opportunities, business enterprises protect and create value for their stakeholders, which includes their owners, employees, customers, regulators, and society as a whole.
