NO, it isn’t.
I have sympathy with directors who complain about boring red-amber-green risk heat maps. How do we engage directors for Enterprise Risk Management? COSO and other opinion leaders have taken a great step into the right direction with the new COSO framework. Linking risk and opportunity to strategy and performance is the right way to go. I have shared some thoughts about the 2017 update in previous blogposts.
By its very nature Enterprise Risk Management looks at the entire enterprise. Hence, we need to find a way to cover the micro, such as smaller operational risks AND the macro, such as the really significant risks and opportunities. Then ERM truly becomes “E”. When I accompany customers along their ERM journey’s, I really make sure we cover the entire spectrum. Otherwise we miss out on either end. And btw – that’s the beauty and the challenge of doing good ERM….
and the benefit is
I still have two bones to pick with some of the proponents of the ‘new’ ERM. Firstly, strategy is very important, but let’s not forget all the other, smaller risks! Many a little makes a mickle. And secondly, we need to up the ante in terms of communicating the tangible benefits of ERM. Concepts are great to understand a matter. However, a board of directors or a CEO will want to see expected tangible benefits before engaging a CRO. When writing about ‘tangible benefits’ in a business context, I’m clearly referring to a measurable impact on either sales or profits and preferably on both. These benefits must be on top of the well-documented benefits of good ERM with regards to credit rating or reduction of compliance costs.
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