5 Steps to Reinvigorate Your ERM Program Components
Being responsible for overseeing enterprise-wide risk management programs can be a daunting task. Especially when it feels like it’s stalling or failing due to a lack of engagement across the three lines, an absence of executive or internal stakeholder buy-in, or ineffective systems and processes slowing you down. There are many reasons why enterprise risk management (ERM) program components stall and sometimes even fail. The good news is there is still time to give your ERM program a kickstart.
ERM program components explained
If you’re here, you likely know that an ERM program provides a comprehensive approach to identifying, assessing, and managing risks an organization faces. It involves a systematic and ongoing process that enables organizations to holistically understand, prioritize, and manage risks. ERM program components typically involve the following five key steps:
- Risk identification: Identifying and documenting all potential risks the organization faces.
- Risk assessment: Assessing the likelihood and impact of each identified risk on the organization.
- Risk prioritization: Prioritizing risks based on their likelihood and organizational impact.
- Risk management strategy: Developing and implementing risk management strategies to mitigate or control the identified risks.
- Risk monitoring and reporting: Ongoing monitoring of risks ensures that risk management strategies are effective and risks are managed appropriately.
An effective ERM program helps organizations better understand their risks and make informed decisions on managing them. By taking a proactive approach to risk management, organizations can reduce their risk exposure, protect their assets, and improve their overall performance and resilience. But what happens when your program or one of its components goes south?
Why do ERM program components fail or stall?
To understand why these programs and their respective ERM components stall, let’s first put ourselves in the shoes of the risk owner. At the beginning of the year, there’s a brainstorming or questionnaire period where risks are identified and assessed as a group. After one quarter passes, the risk owner receives a notification asking them to update their risks by filling out these risk assessments. What does this mean to the risk owner?
They ask a few questions, such as: Where does this risk assessment go? Am I really comfortable with my risk assessments? Isn’t this my perception of risk and not the actual risk? How do I know this is an accurate assessment of my risk levels? What impact does it have to the organization? What is the value add? Why am I even doing this?
This lack of buy-in permeates itself into a culture of guesswork and pointlessness, eventually leading to an unfinished and/or failed implementation. Here are some other reasons for ERM program failure.
- Lack of leadership support: ERM programs require strong leadership and commitment from senior management to be successful. Without this support, the program is less likely to be taken seriously and may not receive the necessary resources and attention.
- Poor risk culture: ERM programs rely on a culture of risk awareness and transparency within the organization. If the culture does not support these values, then the program may struggle to gain traction.
- Lack of clarity on objectives: ERM programs need clear objectives and a well-defined scope. If these are not established upfront, then the program may be perceived as unfocused or unclear, making it difficult to gain buy-in from stakeholders.
- Inadequate risk assessment: The success of an ERM program relies heavily on the quality of the risk assessment process. If the assessment is incomplete or inaccurate, then the program’s risk management strategies may be ineffective.
- Poor communication: Effective communication is critical to the success of an ERM program. If stakeholders are not kept informed of the program’s progress or if there are communication breakdowns, then the program may struggle to gain support and may ultimately fail.
- Over-complication: ERM programs can become overly complex and burdensome if not managed carefully. If the program is too complex, then it may be difficult to implement and may be perceived as overly bureaucratic, leading to resistance and eventual failure.
5 Steps to getting your ERM program components back on track
If you feel like your ERM program is failing or running on fumes, we’ve narrowed down five steps you need to take to get your program back up and running:
- Define critical success factors: Align what success looks like upfront and get buy-in from stakeholders and execs on what the criteria are, how you’ll measure success, and how the plan ties into corporate objectives. Come up with three points as to what will make this ERM program successful.
- Have a kick-off meeting with execs: There’s an age-old mindset that risk management is a culture and not a process. The organization must understand that execs are setting the tone at the top.
- Set your metrics: Tie in strategic objectives, key results, and indicators into the risks. Most department heads/execs are tied to departmental objectives. What risks have been identified to block them from achieving these objectives? For example, low employee engagement scores for the HR team, or an increasing number of customer complaints for the Support team. Work with risk owners to determine what they would like to see in their risk profiles.
- Create action plans: After the assessment, there should be a meaningful discussion of action plans. It’s often more difficult to ask for resources to mitigate risk rather than asking for a resource that will block them from achieving their departmental objectives.
- Embrace ERM software solutions: Don’t be afraid of technology. There are some simple ERM solutions that can get you up and running in a month without the massive cost of a long, drawn-out implementation. Resolver offers an out-of-the-box solution that doesn’t require teams to maintain it (yes, including IT). We make the data collection much less painful by allowing risk owners to fill out their risk profiles on their iPads and mobile devices in under a minute.
How Resolver can improve your ERM program
We want your ERM program to be efficient, agile, and promote a risk resiliency culture in your organization. Resolver’s ERM software enables GRC teams to easily capture risk, regulatory, and control information from across the business and analyze it in context to understand impact and exposure. Save countless hours on chasing information and creating board reports through:
Improved collaboration: Resolver’s GRC platform improves collaboration by making the collection and distribution of information easier.
Real-time information: Our accessible end-user reporting channels, regulatory content streams, and a suite of integrations make it possible to identify risks as they emerge.
Centralized view of all data: All risk data is centralized in one location and connected to associated controls and assessments, setting the stage for value-add analysis.
Trend analysis and notifications: Track key risk indicators (KRIs), prioritize critical watch areas, and receive notifications when KRIs exceed tolerance.
Ready to revamp your ERM program? See our product in action at an upcoming ERM software showcase, or request a demo to have a custom walk-through of Resolver’s risk intelligence platform for your team.