Final answer:
ERM aims to manage, not eliminate, operational risk by defining business strategies, prioritizing risks, and identifying mitigation methods. Eliminating all risk is not a realistic goal; instead, it focuses on reducing the impact of imperfect information on economic outcomes.
Step-by-step explanation:
The goal of ERM (Enterprise Risk Management) practices and processes is primarily to ensure the robust management of risks within an organization. However, the goal is not the elimination of operational risk completely, but rather the management of risk to a level that is acceptable for the organization.
ERM involves several key steps: defining the business model and strategy, prioritizing associated risks, and identifying ways to mitigate risks. Methods to reduce the risk of imperfect information include adapting existing means, investing in technology, improving human and capital resources, and modifying operational plans for better execution.
Imperfect information can significantly affect the economic parameters of price, quantity, and quality, impacting market dynamics and the decision-making process. Efforts to reduce imperfect information might involve deregulating the banking and financial sector, reducing government controls, and mitigating protectionist policies to create a more market-oriented economic environment.