capital priority. Or consider the unflattering news story which
caused massive reputation and civil damages because leader-
ship failed to consider the full spectrum of adverse impact in
their initial public response. Certainly, we realize the impacts
of such actions with the latest occurrence this spring with
United Airlines.
In the scenarios above, there were people discussing risk
and strategies. However, when the elements of risk are evalu-
ated in isolation, the results can be devastating. Effective and
timely risk management is a necessary management capability
at all levels. Therefore, why not create a critical information
pathway to the C-Suite to improve decision-making and strat-
egy? Why not make it streamlined and efficient, focusing on
what really matters? Why not let it be a competitive differen-
tiator?
Why not ERM?
Traditional risk management typically
deals with safety, insurance, contracts and
claims. ERM, by contrast, is a business
discipline. It is a set of practices put into
place to help an entity succeed and is spe-
cific to the identification and management
of broad organizational risk. Thus, ERM
allows an organization to broadly manage
risks and seize opportunities related to
the achievement of its strategic business
objectives. This enables leaders to create
strategically aligned processes supporting
appropriate levels of risk assessment and
communication.
Seems better, doesn’t it? It certainly is
better, but it isn’t easy.
The hurdles faced in achieving effec-
tive ERM are similar to those encountered
during the implementation of any kind of
broad program requiring systemic change.
Budget, timelines, competing projects and
finite resources are the typical challenges,
but others are more elusive. Let me break it
down with some lessons from the trenches:
worst, be sabotaged. You must design the program with con-
sideration of the day-to-day work that occurs and the culture
that it occurs within.
Lesson Three: Value drives sustainability.
This may be a bit obvious, but it is important enough to
call out. Tangible value must be articulated for every process.
People are more easily persuaded to adopt change when they
perceive a personal value to following a new routine. The
value does not have to be substantial. It simply needs to be
something that drives or motivates increased participation
and acceptance.
Lesson Four: Sustainability requires persistence.
ERM program designers must recognize and plan for
staff turnover, complacency and change in
business practice. While implementation of
an ERM program is a large hurdle, regular
maintenance of the program is required. New
employees must be trained, key performance
indicators must be tracked and reported, and
failsafe measures must be built-in for those
occasional ornery employees who simply
refuse to follow the rules.
Erin is the talent behind
Black Fox Strategy, a highly
specialized executive
consulting practice based
on the philosophy that
organizational success and
sustainability are best achieved
through integrated strategy,
risk and resilience capabilities.
Erin supports private, public
and non-profit clients, and
holds a MBA in Operational
Risk, Bachelor degrees in both
Finance and Organizational
Management, a Professional
Certification in Paralegal
Studies, and a RIMS Fellow
Professional designation.
In summary, designing and implement-
ing ERM may seem like a hassle, but it is
worth it.
The intrinsic value of an ERM discipline
is the enablement of an organization to spend
less time dealing with crises and more time
managing the business. Putting out daily
micro fires with a bit of calamity thrown in
every now and then may seem like a worth-
while investment at the time, but it eats away
at the time available for strategic thinking and
planning.
On the other hand, stable organizations
are proactive and nimble. They seize upon
growth or quality opportunities because they
have the t