The Committee of Sponsoring Organizations of the Treadway Commission (COSO) released the ERM (Enterprise Risk Management) Framework: Enterprise Risk Management–Integrating with Strategy and Performance on September 6, 2017. This is COSO’s first significant update to the original 2004 ERM document, Enterprise Risk Management–Integrated Framework. The provisions of the updated ERM framework become testable on the CPA Exam April 1, 2018.

The 2017 update highlights the importance of considering risk in both the strategy-setting process and in driving performance. It begins with a perspective on current and evolving concepts and applications of enterprise risk management to meet the demands of an evolving business environment, such as shifts in economic markets, evolving technologies, and changing demographics in supporting decision-making. The second part is the framework itself, organized into five components, each reflecting a different viewpoint, operating structure, strategy, and decision-making process.

The Executive Summary for the update provides the following highlights:

  • Provides greater insight into the value of ERM when setting and carrying out strategy.
  • Enhances alignment between performance and ERM to improve the setting of performance targets and understanding the impact of risk on performance.
  • Accommodates expectations for governance and oversight.
  • Recognizes the globalization of markets and operations and the need to apply a common, albeit tailored, approach across geographies.
  • Presents new ways to view risk to setting and achieving objectives in the context of greater business complexity.
  • Expands reporting to address expectations for greater stakeholder transparency.
  • Accommodates evolving technologies and the proliferation of data and analytics in sup­porting decision-making.
  • Sets out core definitions, components, and principles for all levels of management involved in designing, implementing, and conducting ERM practices.

COSO is jointly sponsored by the American Institute of Certified Public Accountants (AICPA), the American Accounting Association, Financial Executives International, the Institute of Management Accountants, and The Institute of Internal Auditors. For more information, visit

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Susan J. Cox, M.Acc., CPA is a Senior Technical Editor for Surgent CPA Review. Susan received her graduate and undergraduate degrees from Florida State University. Prior to joining Surgent, Susan worked as a technical editor for Thomson Reuters, an accounting instructor for the University of South Florida, a senior internal auditor for GTE, and an experienced senior auditor for Arthur Andersen & Co.