TITLE:
From ERM to HERM: A Holistic Enterprise Risk Management Framework for Banks in a Volatility, Uncertainty, Complexity, and Ambiguity (VUCA) World
AUTHORS:
Christopher Goh
KEYWORDS:
Holistic Enterprise Risk Management (HERM), VUCA, Banking Risk, Design Thinking, Risk Governance, COSO, ISO 31000, Basel III
JOURNAL NAME:
Open Journal of Business and Management,
Vol.14 No.3,
April
13,
2026
ABSTRACT: The increasing Volatility, Uncertainty, Complexity, and Ambiguity (VUCA) of the global financial environment has exposed fundamental weaknesses in traditional Enterprise Risk Management (ERM) frameworks. Major banking scandals—including Wells Fargo, Commonwealth Bank of Australia, and Barclays—illustrate that conventional ERM systems remain fragmented, compliance-driven, and insufficiently integrated with strategy, governance, and execution. This paper proposes a Holistic Enterprise Risk Management (HERM) framework as a next-generation risk governance model for banks operating in a VUCA world. Drawing on design thinking, systems thinking, and action research principles, the study reconceptualizes ERM as an integrated strategic capability rather than a technical compliance function. The paper synthesizes insights from , ISO 31000 (ISO, 2018), and Basel III (BCBS, 2010) to develop a unified conceptual model that aligns corporate strategy with risk appetite, risk capacity, and operational execution. The proposed HERM framework is structured around three core mechanisms: 1) an Input-Process-Output-Control risk system, 2) a 6As change management model (Awareness, Alignment, Action, Adoption, Assurance, Anticipation), and 3) a HERM Balanced Scorecard linking Key Risk Areas (KRAs), Key Risk Indicators (KRIs), and Key Performance Indicators (KPIs). Using three African banks—Afreximbank, Cooperative Bank of Oromia, and Barclays Bank of Zimbabwe—as illustrative case contexts, the paper demonstrates how HERM can bridge the persistent strategy-execution gap in banking risk management. The framework advances theoretical understanding of ERM by integrating strategy, governance, people, processes, and technology into a single holistic architecture.