Risk is a constant threat looming over organizations. Proper approach must be taken to address potential risks and threats.
Fremont, CA: As organizations begin to implement enterprise risk management (ERM), the risk managers need to look at the big picture. In the absence of proper planning and a maturity model goal, ERM efforts will be in vain. IT leaders must be committed to spearheading and acquiring skilled resources that are dedicated to ERM efforts. However, ERM is versatile as each organization has a unique mission, vision, size, and culture. Risk managers must consider these factors while implementing strategies to sustain their ERM programs. Here are a few ways organizations can improve their ERM efforts.
1. Being Proactive
Organizations must form their ERM strategies to be proactive instead of reactive. Risk management processes should include predictive insights to recognize that a risk event is going to occur rather than identifying risk when it happens. From a financial risk perspective, a company would not declare in advance that they are going bankrupt. Stakeholders must anticipate and be prepared. They must look for signs such as the CFO leaving the company, significant changes in the structure of the company, shareholders selling or transferring shares, or employee strikes or product recalls. Observing such events in the partner company and understanding their ramifications can save the organization from becoming financially unstable.
2. Prescriptive Measures
ERM programs are descriptive and do not provide actionable operational guidance and workflow to support stakeholders in actively mitigating risk. It is essential to have a plan to address the threat. For instance, an effective strategy can identify an alternative source of supply and define the stakeholders responsible for securing it. Additionally, the plan must be accessible by all the relevant parties. An effective plan will not be successful if the people involved in them are not notified. Thus, centralized automated systems are crucial. It is possible to create an effective action plan with the right foresight and the right tools and document it for all team members to know their role.
3. Leveraging Technology
Technology is a great enabler when it comes to identifying predictive insights and providing centralized access to risk action plans. It is highly impractical to monitor everything manually as it is not efficient and has an uncoordinated approach to risk management. The right tools such as artificial intelligence trained to generate predictive insights and tools specifically designed to document risk action plans makes the process automatic.