What Does Enterprise Risk Management (ERM) Mean Today?
With the changing landscape of political, operational and financial risks, ERM has taken on a whole new set of strategic factors to consider for organizations. Traditional definitions of ERM still apply, however practitioners must become more focused about the implications of an expanding set of issues to face in an increasingly riskier world.
The Risk and Insurance Management Society (RIMS) defines ERM as “a strategic business discipline that supports the achievement of an organization’s objectives by addressing the full spectrum of its risks and managing the combined impact of those risks as an interrelated risk portfolio.” This definition is truer today than ever, however we are observing organizational clients falling into the trap of “silo” risk management rather than looking at risk holistically.
Whether you are an individual, family, or organization, risks are managed in a way that ensures stability, continuity and growth of the person or organization. For organizations, key questions to ask yourself are:
“Are we better off today than yesterday?”
“What would we change today to feel better and more secure about our future?”
Answers to these questions help to prioritize the immediate risk-benefit analysis and ratios. For example, one recent project allowed us the opportunity to explore a variety of risks our client is experiencing. We assisted our client with:
1. All Casualty (Liability, Workers’ Compensation, etc.), Health, and Disability risk profiles related to the entire organization’s risk portfolio. Specific objectives included analyzing and prioritizing significant claims to determine the key factors in a customized predictive model.
2. Priorities for the analyzed risk profiles for integration into their ERM “dashboard”.
3. Reviewing the risk profiles in the context of all significant internal and external environments.
4. Determining the “scores” these risk profiles have within the entire ERM management environment.
5. Creating a process for continual monitoring and management of these risk profiles to optimize the costs.
6. Showing that risk profile optimization can be utilized as competitive advantage rather than a cost center.
Given your current environment in 2017, a careful look at your portfolio of risks is advised. To learn more about how our RiskPro® suite of products and services could assist your organization in this effort, please contact us >>