ERM

enterprise-wide risk management (ERM)

An integrated approach to measuring and managing risks within a financial institution. ERM, as opposed to traditional separate, "silo" based, risk analysis, recognizes that risks are inter-related and often have common drivers. For example, the macroeconomic conditions related to high interest rates impact credit risk in addition to interest rate risk. Moves to ERM are partially driven by the Basel II capital guidelines and related rules issued by national banking regulators. American Banker Glossary

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( European exchange rate mechanism)

The system that countries in the European Union once used to pay exchange rates within bands around an ERM central value. Bloomberg Financial Dictionary

( Exchange Rate Mechanism)

The methodology by which members of the EMS maintain their currency exchange rates within an agreed-upon range with respect to other member countries. Bloomberg Financial Dictionary

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ERM ERM noun FINANCE

abbreviation for Exchange Rate Mechanism:

• Luxembourg says it remains fully committed to keeping its currency within the ERM.

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   Exchange Rate Mechanism. A system first created in 1979 to limit movements in the currencies of member countries of the European Union. A grid allows currencies to fluctuate within bands either side of their fixed central rates. New countries are supposed to enter their currencies in ERM-2, with its wide 15 percent bands, for two years before joining the Eurozone.

   ► See also Euro, European Union.

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ERM UK US noun [S]

► ABBREVIATION for EXCHANGE RATE MECHANISM(Cf. ↑exchange rate mechanism)