ERM Challenge Series: #3: Designing a Risk Management Culture; The Benefits of Participating in the ERM Process

ERM Challenge #3: Designing a Risk Management Culture; The Benefits of Participating in the ERM Process


ERM Objective:
Generate support for ERM from the board through to the front lines.

The Trap:
There is a negative cascading effect when the ERM team cannot generate management support for the program. If there is no tangible link between the ERM process and the organization’s performance, then ERM is regarded as a cost centre rather contributing to achieving targets. When middle management regards ERM as a departure from their day job, or as a compliance or audit, then they will be reluctant participants.

The Solution:
The KEY question is, “What’s the benefit for me to support risk management?” Answers to this question include:

• Board, “I will have greater assurance that management understands and manages their risks effectively”
• Executive, “To increase the likelihood of achieving my performance targets”
• Risk Owners, “To make a logical argument to management about the resources that I need allocated in order to achieve my targets”