Enterprise Risk Management (ERM) can be defined as the capability of an organization to manage all business risks to generate acceptable fiscal results.
Some organizations still rely on their Risk Management function to cover their overall company – but by definition, Risk Management (RM) and Enterprise Risk Management (ERM) are very different. One key element that is not usually addressed under Risk Management is the organization’s non-insurable risks. These include strategic goals, social media, third party risks, and innovations. However, Enterprise Risk Management (ERM) considers these risk categories as well, as they could have a severe impact on an organization’s value and reputation if things go wrong. Another aspect of ERM that is not addressed under RM is the breadth of coverage and assessment of risks – while RM mainly considers the probability and impact of, and mitigation plan for risks, ERM also studies the velocity, effectiveness, longevity, and holistic impact of these risks.
Enterprise Risk Management assesses a risk beyond the silo where it was identified.
Implementing a good Enterprise Risk Management strategy will make the relevant stakeholders of your company more accountable, improve governance, and aid better decision making. It also encourages proactive risk awareness and avoidance rather than reactive risk management.
Some other benefits of Enterprise Risk Management include:
Even though the concept of ERM has been around for decades, its importance is only realized when companies go through severe crisis periods which could have been avoided or controlled with a proper ERM Plan. Several templates can be used to create a good ERM Plan, but the content that goes into these templates is of utmost importance.
A strong Enterprise Risk Management Plan should encompass:
At Affility, our experts will help you define your essential ERM components, discuss key ERM principles and concepts, suggest a common ERM language to be followed throughout the organization, and provide clear guidance for your firm to set up a solid Enterprise Risk Management (ERM) framework.
Our ERM process revolves around the vision and strategic goals of your company. The following are the core components of our ERM consulting engagements:
Our services also include the incorporation of data analytics and other relevant technologies in the assessment and management of enterprise risks – we can offer this unique service because our consultants are proficient in their respective areas, and also because we ensure that the team that we formulate for each engagement consists of experts from diverse fields of study so that you get the overall package in terms of knowledge and expertise.
Eventually, your Enterprise Risk Management (ERM) strategy should answer three fundamental questions:
Designing and executing an Enterprise Risk Management (ERM) program does not have to be done in isolation. Multiple departments of an organization should be involved in the discussion, and they can become either powerful allies or forceful detractors. We can be your advocate in bringing all the relevant stakeholders on board and ensuring that they cascade this advocacy across their respective departments. Even though our consultants come with years of experience across several domains, we don’t follow a one-size-fits-all approach in our engagements. We believe in highlighting the uniqueness of each of our clients, which is why our services are tailored to suit your particular organization and budget.
It is normal to feel daunted by the thought of implementing a successful ERM across your organization, regardless of whether you are a small company, medium enterprise, or a large-scale conglomerate. We can help you by setting measurable parameters for success, and efficiently managing the scope by designing the implementation in a controlled way and monitoring progress against a single goal.