ERM Challenge #1: Relevance to the Board & Management; Aligning ERM and Strategy
ERM Objective:
Align the ERM process with management’s priorities to ensure it consistently creates value for the organization. The board and management view ERM as essential to achieving annual targets.
The Trap:
The ERM process is perceived as an audit or assurance exercise, rather than as a PERFORMANCE-focused process. Identifying risks via traditional categories (e.g. IT, HR, Finance, etc.) loses the relationship between objective and risk. Mapping risks back to objectives after the fact is ineffective. The key question is, “If this is our objective, what will prevent us from achieving it?”
The Solution:
ALL risks are identified for each of your organization’s strategic priorities. There is direct line of sight between performance targets and the risks you must manage to achieve them. Risks are not identified by traditional siloed categories. When you report your risks, ALWAYS list the risks beside the relevant objective.
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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.
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