Since the mid 1990’s, Enterprise Risk Management has been discussed a lot but rarely effectively implemented. Often the discussions have been remained largely academic or not actionable. There is a genuine need for ERM, as business failures and scandals in recent years have illustrated. In complex businesses, it is unreasonable to expect senior management to fully understand the risks, and the interrelationships of the risks that their people are taking, without the use of improved tools and better methods.
In many organizations, risks are being managed but frequently in haphazard or fragmented ways. Many companies lose sight of the big picture and do not sufficiently link risk management activities to their business strategies.
Some risks are being identified and managed, but only with limited co-ordination. Other risks are not on the radar screen. Many activities are restricted to a controls based or regulatory-compliance approach with individual requirements being managed too narrowly. There is minimal or no coordination to take advantage of value available in aggregating these compliance risk management activities within an effective risk management approach.
The benefits of having a more structured approach to ERM can include:
- Promoting a broader understanding of risks;
- Putting in place a process to highlight the key risks, what is being done and by whom;
- Bringing to light emerging risk earlier;
- Enabling organizational alignment to manage the risk and control the cost of compliance; and
- Allowing organizations to take on and effectively manage risks that their competitors cannot.
A five step project plan enables an organization to identify and coordinate risk management activities, identify risks not adequately managed, close gaps and move forward. It involves establishing a framework, assessing and rating risks, inventorying current risk-response activities, and closing the identified gaps.
ERM is a journey and delaying further on ERM very likely means losing ground to competitors.
To find out more about ERM, please contact : Dennis Mah (firstname.lastname@example.org), Melissa Koay (email@example.com), Sarine Loo (firstname.lastname@example.org), Choo Seng Choon (email@example.com) or call us at (603) 2166 1229