ERM Challenge #10: Losing ERM Momentum in Year 2 and beyond; Keeping ERM Fresh & Relevant
ERM Objective:
Maintain high levels of support and engagement in your ERM program
The Trap:
Rolling the same risks over year to year will quickly devalue your ERM program. Key stakeholders will begin to see it as a “tick-the-box” exercise. This approach contradicts the strategy of identifying risks as part of your annual strategic planning cycle.
The Solution:
Change how you identify risks each year to keep the process fresh and relevant. Bring in outside experts to brainstorm your risks. Conduct risk identification in workshop formats that include all key stakeholders for a given objective or project.
Integrate risk identification and assessment into the annual budgeting cycle. If budgets cannot be approved without a current risk assessment it will prompt renewed thinking each year.
Finally, risk informed decision making requires management to consider risks in advance of their strategic plan. Ensure the ERM team participates in these strategic planning cycles to keep management informed of 2 types of risk; The risk of executing a strategy, and the risk of NOT executing a strategy.
Thursday, June 28, 2012
Saturday, June 2, 2012
ERM Challenge Series: #9: Risk Relationships; Treating Risks as Isolated Events
ERM Challenge #9: Risk Relationships; Treating Risks as Isolated Events
ERM Objective:
Understand the cause and effect relationship between risks.
The Trap:
Most companies do not have a practical, relatively simple method to understand this. The other challenge is when to perform this analysis, which is BEFORE your risk assessment.
The Solution:
Risks do not necessarily exist in isolation of each other, many are interconnected. If one risk occurs, which other risks may occur? Chain reactions of risk events happen, but this is rarely considered when assessing risk.
I have helped my clients understand their most influential “upstream” risks that can trigger “downstream” risks to also occur. Upstream risks have a larger Impact once you consider the full extent of their influence on your organization.
Conducting this simple analysis before a risk assessment will change how management scores the Impact scale.
ERM Objective:
Understand the cause and effect relationship between risks.
The Trap:
Most companies do not have a practical, relatively simple method to understand this. The other challenge is when to perform this analysis, which is BEFORE your risk assessment.
The Solution:
Risks do not necessarily exist in isolation of each other, many are interconnected. If one risk occurs, which other risks may occur? Chain reactions of risk events happen, but this is rarely considered when assessing risk.
I have helped my clients understand their most influential “upstream” risks that can trigger “downstream” risks to also occur. Upstream risks have a larger Impact once you consider the full extent of their influence on your organization.
Conducting this simple analysis before a risk assessment will change how management scores the Impact scale.
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About The Author
- Richard Wilson
- Richard is a Director in PwC's Risk Advisory practice with clients in both Canada and the United States.
He is an experienced senior executive with 15 years in a CEO or COO role (publically traded and private firms). Richard has been leading risk management implementations for more than a decade incl. 60 C-level risk assessments, and has led online risk assessments for 30,000 people in 25 countries.
He has advised the largest company in the US on risk management, and he has facilitated a risk assessment for the United Nations. Richard has been published in Compliance Week, Canadian Business, and the Globe & Mail and has been a keynote speaker on the topic of risk at many conferences in both Canada and the US since 2004.