Column: Risk Management

ERM Kick-Start

By: | April 4, 2016

Joanna Makomaski is a specialist in innovative enterprise risk management methods and implementation techniques. She can be reached at [email protected]

Living through many Canadian winters has allowed me to witness this very scene: Exasperated drivers stuck in the snow.

Tires whirl. They spin at high speeds, neither advancing nor falling back. How disheartening.

All too often I see this very problem with persons charged with implementing enterprise risk management (ERM) programs. I sense their frustration around the perceived futility of their efforts and lack of traction of ERM within the organization.

I hear comments such as: “I work really hard but no one seems to really care about ERM,” or “I can’t get any attention or resources to support my efforts.”

Stakeholders such as a CFOs and CEOs often have different agendas, needs, and expectations of ERM and risk assessment efforts. Do they understand they will be involved in the ERM effort and to what degree?

These individuals toil for months, even years, only to watch their ERM efforts get de-scheduled from the corporate agenda, rerouted to another division, outsourced or eliminated altogether.

Is there a solution? I believe so. Over the years, I have been using a system that I call: “ERM kick-start.” The genius of the ERM kick-start method is that it encourages you to do less, not more, to get further.

Similar to freeing your car from the snow — you should treat the gas pedal gently, make small motions, rock back and forth until you gain some traction and only then will you find yourself move forward.

The idea holds true with the ERM kick-start method. For those individuals who suffered less than successful attempts at ERM implementation, the first step to the ERM kick-start method involves taking a solid look at the journey already taken to date.

First, I’d verify if an ERM needs assessment was conducted. Were key stakeholders consulted on what they need and how they will benefit from the ERM program?

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Stakeholders such as a CFOs and CEOs often have different agendas, needs, and expectations of ERM and risk assessment efforts. Do they understand they will be involved in the ERM effort and to what degree?

It is also critical to discuss the proposed currency expected for risk measurement with all stakeholders. Will risk assessment results be expressed in dollars, relative scores or qualitative descriptions?

Who will be looking at or using the risk evaluations results? When? Why? How often?

What is the planned protocol to validate, document, circulate and protect risk information? Where will the risk arbitrator sit? In other words, who will have final say as to whether a risk is a risk to the organization? How will risk efforts and response planning be widely communicated?

It is also critical to discuss the proposed currency expected for risk measurement with all stakeholders. Will risk assessment results be expressed in dollars, relative scores or qualitative descriptions?

ERM kick-start requires this kind of information to help shape a realistic ERM vision for the organization.

Traction is best gained by delivering on small chunks of your pre-agreed-to plan. Letting everyone know what you will deliver on, and showing progress will gain you support.

Deliver in smaller chunks and kick-start your ERM vision. &

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The R&I Editorial Team can be reached at [email protected]