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.
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.com can help embed and enhance the practical application of enterprise risk management for better more risk aware improved business performance.
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