With the multitude of information available, it is no surprise that the process of implementing an ERM Program seems daunting. As highlighted in our prior blog, Strategic Risks: More Important Now Than Ever, one of the very first steps in this process is to form an Executive Risk Committee (ERC).
OK. The Committee has been formed. What do you do now? As we mentioned, an ERC is comprised of senior leaders who already subscribe to the ERM process, the task they have now is to ensure that the entire organization subscribes to the same. While every employee will not be involved in the day to day activities of the ERC, there should be a clear understanding of what is being accomplished and why. There are a few ways to achieve this, including:
- Interviews/Questionnaires: These are very useful to understand key risks from the operational perspective. Usually, the operational business units leaders are able to identify additional operational risks and, based on their daily work, provide the senior leadership with information that they don’t always have.
- Audits: Confirming that the business units are complying with the controls in place further reinforces the importance of not simply “going through the motions.”
- Regular Meetings: Although only the members of the ERC will be involved in the meetings, sticking to a regular schedule will only work to demonstrate the commitment of senior leadership to this process which will, in turn, motivate the rest of the organization to embrace the process.
At the end of the day, for the ERC to have a meaningful impact, the entire organization needs to embrace the idea of Enterprise Risk Management and, we feel, the steps above are a great start. However, the road to successful ERM process is perilous and must be approached in a strategic way.
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