What are the Benefits of Enterprise Risk Management? Per the Committee of Sponsoring Organizations ERM improves the ability to:
--Align risk appetite to strategy --Minimize operational surprises and losses --Enhance risk response decisions --Prioritize of resources to mitigate risk --Identify linkages among risks across the enterprise --Link growth, risk and return --Link investments to risk --Seize opportunities based on facts
Critical Success Factors:
Engage top management. Buy in from the Board of Directors and CEO is imperative. The Board's Audit Committee is a good place to start. Do not start an Enterprise Risk Management effort if you cannot get top management buy in--wait until you do have executive buy in otherwise the program will fail.
Engage the Chief Audit Executive and Chief Compliance Officer; these units posess a global view of the entity's exposures and their familiarity with the entity's vulnerabilities will jump start the risk identification and measurement process.
Hold executive level workshops to identify the corporation's top five risks and focus your ERM approach on these to demonstrate the value added nature of ERM.
Communicate the ERM message and push out ERM training.
Engage all business divisions since ERM addresses all facets of the business or government entity and will only succeed when all business units are on board.
Communicate that ERM will not stifle innovation and the entrepreneurial spirit quite the opposite since it is supportive of fact base decision making innovative ideas can be explained in the risk / return language that ERM tactics require.
Keep it simple, less is more.
ERM is not about complex statistics and formulae. The existing centers of risk management remain as they were. The CFO, Treasury, Finance, and Risk and Insurance Management entity's risk management roles change little, they will likely be looked upon as experts in financial risk management and participate in the Executive Risk Management Council.
Involve ERM in the entity's: --Strategy Setting --Marketing --Manufacturing and Distribution --Operating Plan Development --Research and Development --Management and Organization --World - Wide Sales --Forecasts and Financial Data --Financing --Risk and Insurance Management --Safety and Security --IT infrastructure, IT Security and Privacy, and --Business Controls related to all of the above