Objective Setting objective setting is the second ERM component because it must precede the other six components. For example, management must set objectives before it can identify the events that affect the company's ability to achieve those objectives. Likewise, event identification must precede assessing the risks related to the events. Top management. with board approval, needs to articulate why the company exists and what it hopes to achieve. This is often referred asthecorporate vision or mission. The company u its mission statement as a base from which it sets and prioritizes corporate objectives, which need To be easy to understand and measure objectives are set at the corporate level and linked to and integrated with a cascading series of ever more specific subobjectives set in the various subunits in a company. For each set of objectives, critical success factors (things that must go right to achieve the objectives) must be determined and performance measures established to determine whether the objectives are met. Strategic objectives, which are high-level goals that support the company's mi sion and are intended to create shareholder value, must be set first. In order to meet these strategic objectives, management should identify alternative ways of accom plishing the objectives, identify and assess the risks and implications of each alterna- tive. formulate a corporate strategy. and set operations. compliance. and reporting objectives. As a rule. a company's mission and strategic objectives are stable However, its strategy and the other objectives are more dynamic and must be adjusted for changing conditions and realigned with strategic objective operations objectives, which are a product of management preferences,judgments, and style, may vary significantly among entities. For example, one decides to company be an early adopter of new technology, another chooses to adopt technology as soon a it is proven. and a third elects to adopt technology only after it has matured and is
generally accepted. operations objectives are influenced by and must be relevant to the