Organizations exist to create value for their stakeholders. By setting objectives, developing strategies, following through and continuously improving processes, value is created.
That’s the ideal situation, at least. In reality, it’s not always as simple as making a plan and sticking to it. There’s always the risk that certain events could affect the success of these plans.
It’s the job of management to make adequate preparations to ensure that systems are in place to continue hitting objectives, even when the beast of unforeseen circumstance rears its head.
Enterprise risk management (ERM) is a direct solution to these kinds of uncertainties, allowing management to oversee the continual creation of value on a complete, integrated, organization-wide level.
By utilizing an effective ERM system, you can rest assured that the organization will see a consistently high success rate in terms of hitting objectives and KPIs.
Stakeholders of all kinds, from customers, suppliers, government and regulatory bodies are all increasingly interested in how businesses are implementing ERM. A well-implemented ERM system could set the foundation for many high-quality, long-term client relationships.
Equally, not having a proper system for enterprise risk management could mean your business is perceived as less competent, and could even result in loss of clients and damage to brand image.
In this post, I’ll discuss:
- Introduction to and basics of enterprise risk management
- Benefits of a well-implemented ERM system
- Core ideas of ERM
- Examples of different ERM approaches
- The enterprise risk management process
- Implementing ERM
- Automating ERM
To begin with, I’ll start by breaking down the full scope of an ERM system, and some basic definitions.