As business risks continue to increase, organisations are finding it necessary to implement some sort of formal risk management system. An effective enterprise risk management (ERM) program can help organisations manage their risks and maximise opportunities. Organisations in all types of industries, public and private, have observed a variety of benefits from enhancing their risk management programs.
Many organizations struggle with implementing ERM and identifying how, and at what level, to integrate it into their organization. Managers often say they are already aware of the risks for their respective areas of the business. In these situations, what value does ERM provide, and how does it enable better perspectives and management of risks and risk data?
Organizations often find that ERM programs provide a combination of both qualitative and quantitative benefits. While there are many benefits to ERM, let’s focus on five of them.
- Benefit one: creation of a more risk focused culture for the organisation
- Benefit two: standardised risk reporting
- Benefit three: improved focus and perspective on risk
- Benefit four: efficient use of resources
- Benefit five: effective coordination of regulatory and compliance matters
Through all the benefits noted above, ERM can enable better cost management and risk visibility related to operational activities. It also enables better management of market, competitive, and economic conditions, and increases leverage and consolidation of disparate risk management functions.
Original posts by… Jim Kreiser (Principal – CLA Harrisburg)