5 Key Steps Of Enterprise Risk Management
Embed enterprise risk management ERM into your business with a clear plan with 5 steps. Effective enterprise risk management will improve the sustainability of your business by transmitting the right risk management culture and managing the key risks impacting on your business objectives. Develop an action plan to include the following key areas.
- Create and embed an enterprise risk management plan into your organisation
- Identify attitudes to enterprise risk management ERM which are reducing its effectiveness
- Change international ERM best practices to fit your risk culture and type of enterprise
- Monitor your organisations effectiveness at implementing enterprise risk management ERM
- Take a more balanced risk approach to business strategy setting to boost enterprise performance in accordance with your risk appetite and risk tolerance.
Better understand enterprise risks impacting on your organisation.
Risk Knowledge Management and Understanding
Create a knowledge risk management framework suitable for your business. How is risk knowledge developed and shared across your business? How do you bring together people from across the company from multiple disciplines with different knowledge and experiences?
A holistic approach to business management requires all parts of the organisation to participate in the management of risk and to be held accountable for mismanagement or non management of key risks. How does your business use knowledge management to support risk knowledge to support risk assessment process?
Risk Assurance and Commitment
You need to be more certain you have the time desire and capability to get the best out of your investment in enterprise risk management, otherwise you may as well not bother.
Executive level commitment to enterprise risk management is essential for it to improve business performance. Simply paying lip service to ERM will lead to disappointment at all levels of organisation in enterprise risk management.
Is your business at risk of failing to meet its performance commitment? Using enterprise risk management principles practices and processes could help you resolve business performance issues if you jump in wholeheartedly.
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Risk Acceptance and Risk Control Design
You need a clear risk management policy and a set of procedures to implement a more effective enterprise risk management strategy. This will minimise waste, develop business resilience and enable your business to take more controlled risk to become more successful.
Identify and analysis all significant strategic and operational risks to your business objectives. How likely is each risk? Assess the impact of each risk. Identify alternative actions to manage non acceptable risks. Which risks must you avoid? What can you do to mitigate key risks needed to achieve business objectives? What is your strategy for organising and monitoring accepted risks?
Design a new business process to design-in risk management to normal business decision making.
Risk Management Behaviour
Develop a process for managing external and internal business risk factors. How are you going to ensure all employees including directors follow your new risk management process for all business decision-making.
Integrating enterprise risk management into normal business decision making will help ensure that particularly directors actions don’t open the business to unacceptable or unmanageable risks that could impede the business objectives.
The risk management process should adequately evaluate the likelihood and consequences of inappropriate risk management behaviour.
Enterprise risk management can change the culture of the business to ensure that predetermined risk assessed actions are the actual behaviour of all employees. An initial risk profile can be improved, monitored and reviewed for continuous business performance improvement. You may need to improve the risk management capability at all levels for enterprise risk management to work well.
Maximising Practical Enterprise Risk Management Capability and Optimising Business Performance
There is a real need for business leaders to take more controlled risks to maximise business opportunities and create new ones.
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Improved enterprise risk management capability will protect your business better and create more value with less uncertainty. BusinessRiskTV can help embed and enhance the practical application of enterprise risk management for better more risk aware improved business performance.
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Develop your risk management strategy to focus resources on your key dependencies for success. Ensure your risk management strategy tackles threats that need to be managed or avoided.
To ensure commitment to effective enterprise risk management implementation you need to be clear on what you want to achieve from enterprise risk management principles and practices
Create a strong holistic risk management framework from which to build your risk management process across the whole organisation. It should cover strategic operational and project risks.
Good embedding of enterprise risk management principles and practices involves a number of key steps
- Where does your organisations risk management stand right now. You need to know where you are before you decide where you want to get and how you get there.
- Clearly define your enterprise risk management objectives and what your enterprise risk management framework will cover. If you do not want to start with a holistic approach to business management what do you want to leave out is as important as to what it will cvoer.
- Senior managers and executives need to agree the enterprise risk management action. Where and what are the key areas to focus your limited resources upon? Who will do what to improve risk management within your organisation?
- Get everyone on board with the reasons for embedding enterprise risk management and how it will be implemented. This includes an enterprise risk management training programme plus risk management information system for gathering and disseminating information to all key stakeholders in a way they will quickly understand.
- Develop monitoring and review system to see how your enterprise risk management plan is performing.
It is better to start at the beginning! Starting at the beginning means using enterprise risk management principles and practices to decide on the business objectives your organisation will pursue. This will make embedding good enterprise risk management practices easier than deciding on business objectives and then trying to manage the risks from those objectives.
If your risk management framework for implementing a more risk based approach is solid then implementation becomes easier. Everyone knows what to do and who needs to do it.
To overcome false risk perceptions and false perceptions of enterprise risk management knowing the context of the decision to change to a more risk based approach. This includes running workshops with relevant key stakeholder representatives.