ERM: Solve Business Problems

Enterprise risk management —  correctly implemented — has an immediate practical benefit: to solve chronic and intractable business problems.

That might sound surprising, as many conceive of ERM as a compliance exercise, with purported eventual benefits, such as reduced volatility, managing strategic risk and lowering the cost of capital. But the value should be evident right away. How does ERM solve chronic and intractable business problems? Only if there is a very sharp, comprehensive and rigorous risk identification and assessment process. The trouble is that most embarking on risk ID use either a conventional approach (limited to, say, hazard risk, or “exposure to assets”) or use an ad hoc, informal approach, with no guidelines.

The challenge of developing high quality risk information (see my intro video) is the first concern when desigining an ERM program. If one pays attention to that, then magically the body of risk information is transformed from  a lifeless, inert heap of re-hashed management complaints into an incisive and insightful analysis of the most critical business problems.

I have experienced this time and again with clients. Once the rigour and structure is properly introduced into the exercise, the chronic difficulties which had always escaped definition and proper analysis suddenly come to light. The result is people have much more confidence. They now see and understand previously undetected and unsuspected underlying risk, and are prepared to fix these conditions and move the organization forward.

 

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Definitions: ERM and Risk Assessment – Part 1/2

definition enterprise risk management, risk assessment Enterprise Risk Management is a relatively young discipline. There is no universal agreement on what it really consists of. In some of the academic literature, the definition is assumed. Authors don’t bother with it, and yet actual practice of what people call ERM is varied.

I want to give a critique of some of the definitions of Enterprise Risk Management having currency in management discourse, and then propose my own definition of ERM. Standards such as ISO or AS/NZ 4360 do not define or even contain the term Enterprise Risk Management. But they do define risk itself consistently as being associated with the organization’s goals and objectives.

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ERM Case Sudy – Part 4/5

Entrepreneurial universitySo far in this series of posts, we have seen the genesis of the ERM program in the decision by the Board of Governors; the project team’s review of background materials; and the decision to begin with a trial risk assessment applied to the strategic plan. Now we consider how ERM was developed and rolled out to the rest of the organization.

DEVELOPMENT OF ERM PRACTICE
Conclusions Drawn from Initial Risk Review
The trial risk assessment of the strategic plan yielded a risk register addressing all the main strategic objectives. The plans for mitigation developed by the executive were, for example, to adjust program…

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ERM Case Study – Part 3/5

Entrepreneurial universityThis is the next post in the Enterprise Risk Management implementation case study of Camosun College, B.C., Canada.

IMPLEMENTATION APPROACH
Project Approach – Key Players

As mentioned previously, the idea for enterprise risk management came from the Board of Governors, who were keen to participate in the provincial government’s foray into the new practice. While many public sector executive seemed at least intellectually to accept the idea of applying risk methods to strategy, the Board wanted to see it done and effect some real changes.
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ERM Case Study – Part 2/5

Entrepreneurial universityThis is a continuation of the Enterprise Risk Management implementation case study of Camosun College, B.C., Canada.

INITIAL STAGES
Impetus to ERM: Compliance or Improvement?

The impetus towards risk management came from the Board of Governors. They were aware of BC Government’s initiative, led by Risk Management Branch, to incorporate enterprise risk management into regular planning and management across the provincial public sector (by 2004, already well into the implementation phase).
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ERM Case Study – Part 1/5

Entrepreneurial universityThis is a case study in successful implementation of enterprise risk management — the first of five parts of the case of Camosun College.

Two key aspects of ERM; viz., a good risk identification/ assessment process, and the proper approach to program implementation, are emphasized in this case study. They apply to the implementation of ERM in any organization.
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Create Your Own Risk Management Examples

Experimenting with the Risk Management Process

In previous 3 posts, I described the agenda I use for the “Enterprise Risk Management-Developing and Implementing” workshop, to get participants to work through their own risk management challenges. I also reported on requests expressed in online course feedback. Many want case studies.

In the earliest days of implementing ERM in BC Provincial Government, I remember saying to the Deputy Minister of Finance that, notwithstanding our own innovative risk financing programs, we couldn’t find sufficient examples of the new enterprise-wide approach. He responded by saying that we would have to create our own examples.
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Successful ERM Implementation-4 Keys

2011-10-11 / How to Implement ERM / 0 Comments

erm-implementationEnterprise Risk Management implementation – are there proven principles?
Many risk management practitioners are struggling with trying to ensure successful Enterprise Risk Management – ERM – implementation. If you are in that situation, a first step would be to review conditions for success of programs of all types – whether corporate, public policy, IT implementation, or new management practices – that have been demonstrated in the literature in this area. Then see how they apply to your risk management plan.
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