Last week, I attended the Enterprise Risk Management (ERM) Workshop in North Carolina, held by North Carolina State University (NCSU). This was the second such meeting that was hosted by NCSU. While many topics were discussed, the recurring theme resonating through the workshop was how can a company effectively report an ERM program to the board and explain how such program adds value.
The key to properly explain this to your employees, have them subscribe to it and establish a process is to “keep it simple.” The first step is aligning your ERM process with the overall business plan goals of your organization. Achieving this initial step will demonstrate to the board that senior leadership is looking at the risk across the entire organization and not just from a compliance function perspective. This was emphasized during the workshop I attended, and is a philosophy that, we believe, is key to any company’s successful ERM process.
In addition to establishing the “keep it simple” strategy, the board will need to have clarity on how the company’s leadership views Key Risk Indicators and how they are audited so that they are continually aligned with how your company is doing business. One of the ways to achieve this is through distributing a simple survey that will allow for identification of KRIs throughout the company. Following the review, it will afford a company the ability to be transparent in the way it is reporting risk to its board.
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