Under the COSO Enterprise Risk Management (ERM) framework, which component addresses the organization's core values, ethical values, and the operating structure?

Answer options:

Governance and Culture

Strategy and Objective-Setting

Performance

Information, Communication, and Reporting

How to approach this question

Recall the 5 components of COSO ERM (2017): Governance & Culture, Strategy & Objective-Setting, Performance, Review & Revision, Information, Communication & Reporting.

Full Answer

A.Governance and Culture✓ Correct

Governance and Culture is the component that sets the organization's tone, reinforcing the importance of, and establishing oversight responsibilities for, enterprise risk management. It includes ethical values and desired culture.

Common mistakes

Confusing with the Internal Control framework (CRIME); mixing up Strategy with Governance.

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