Highlighted by a Questions and Answers article in the recent issue of Risk Management Magazine, Enterprise Risk Management (ERM) continues to gain exposure through the successes of companies that are taking the initiative to establish a firm ERM culture. The article, entitled “Creating Value with ERM”, looks at the success of Paychex, Inc., the company that received the inaugural “ERM Award of Distinction” last year. In what ways can this interview with Paychex’s Risk Manager relate to your company and allow for ERM to become embedded in your organization?
The first way is its identification of one of the problems every company runs into – the inevitable resistance to ERM becoming a centralized function within the organization. Thus, the biggest challenge with implementing any ERM program or culture begins with demonstrating the value of ERM. One of the best ways to show ERM’s effectiveness is highlighted in the article; it is important to establish a few small wins that will begin to illuminate how ERM can not only protect your company from the downside of risk, but also show your organization how risk can be used as a driving profitable force that will increase the firm’s bottom line.
In today’s tough economy, your company is already doing a good job playing defense but allowing ERM to become embedded into the culture of your organization will let you play offense. The ALS Group sees this as the sum and substance of what ERM can do within an organization by allowing it [the organization] to move beyond just insurance and operational risks. Instead, ERM will allow for Strategic Risk Management to grow the profits of your company and will drive down the Total Cost of Risk (TCoR). This is a key component within The ALS Group’s culture as we use ERM principles to help mitigate basic risks and provide transparency to senior management to allow them to turn risk into an opportunity.
So, with football season just beginning, let’s move beyond playing good defense and instead take a three dimensional approach to risk to put some points on the board using ERM. If you would like to speak more about Enterprise Risk Management and mitigating your company’s risk, please feel free to contact The ALS Group for more information.
