It seems like everyone is talking about Enterprise Risk Management (ERM) these days, but the question has become: what is anyone doing to further understand how ERM can provide the strategic value that everyone is writing about? One initiative that we at The ALS Group kicked off last Friday is our bi-monthly ERM Work Group meeting where our entire team (and occasionally guests) meet to discuss how ERM is being conveyed to senior level executives through organizations like RIMS and CFO magazine to name a few.
In our latest meeting, one article, in particular, sparked a thirty-minute discussion on how Risk Tolerance and Risk Appetite can be calculated within an organization. The impetus for this discussion was an article on Risk Appetite and Risk Tolerance written by Michael Moody which I have blogged about previously. The discussion, spearheaded by Al Sica, revealed some of their collective experiences with Risk Appetite and Risk Tolerance. The one thing that surfaced after extensive discussion was that Risk Appetite and Risk Tolerance are not easy to qualify for any organization; this was a point we could all agree on. Risk management can help identify the risks involved across the organization but, ultimately, it is the board who must own Risk Appetite and Risk Tolerance. Thus, Risk Management can help C-Suite level executives to successfully quantify the Risk Tolerance and Risk Appetite of their company by identifying not just insurable risks a company could be exposed to, but non-insurable risks as well. This provides senior management with a tool to help bridge the gap between finance and operations to achieve a more 3-dimensional approach to quantifying risk.
The ALS Group will be holding these bi-weekly round tables to discuss not only how we can bring ERM to our clients, but also how we can further enhance our knowledge on the subject. If you would like to discuss enterprise risk management or participate in our discussions further please feel free to contact us. Our contact information is listed below:
Al Sica, Managing Principal – [email protected] or 732-395-4251
Joseph O’Rourke, Associate – [email protected] or 732-395-4259
