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Manage Tomorrow's Surprises Today

Steven Minsky

WSJ: Executives Report Inadequate Risk Management

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Despite reports that more than 65% of organizations have adopted Enterprise Risk Management, executives remain unimpressed and skeptical of the value their ERM programs are providing versus what is needed.

A new report by APQC finds that fewer than 1 in 5 executives say their companies are effectively managing emerging risk, and the report's authors worry that "Companies may be 'checking the boxes' that say they have processes to monitor strategic risks."[1]

Additionally, two in three companies said they did not have a method of ensuring that strategic risks are incorporated into the organization's strategic planning process, and 43% do not have confidence in their method of reporting to the board.

Why the large discrepancy between companies that have adopted ERM and those that are realizing value from ERM implementation? Part of the problem is that risk managers are spending their time on the wrong things. The second issue is that board members, unclear about the methods and value of ERM, are wary of empowering their risk managers to take action.

Risk managers need to break the cycle of form over substance ERM in order to meet leadership requirements and deliver on ERM expectations within their organizations. The benefits are two-fold. Effective risk management directly contributes to bottom line value to the organization. ERM programs must measurably deliver on the Board's key concerns, and an ERM program must deliver small successes quarterly to provide confidence to leadership that goals are being achieved. This confidence reflects positively back on the risk managers responsible for providing transparency and brings increased engagement. Risk Management Software can assist in that process by providing a framework for your risk intelligence, aggregating only what's relevant to the particular topic that's of interest.

Interested in improving your Board of Director Presentations? Download our template for expert guidance on engaging and impressing your board members.

[1] Chasan, Emily. Corporate Risk Management Is Only Going Half Way: Survey. Wall Street Journal. July 3, 2014. Online. http://blogs.wsj.com/cfo/2014/07/03/corporate-risk-management-is-only-going-half-way-survey/?mod=WSJ_hps_sections_cfo

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In this blog, risk expert Steven Minsky highlights the differences between traditional risk management and true enterprise risk management, which is about helping things happen rather than preventing them from happening. Manage Tomorrow's Surprises Today is designed to help you think about risk in new ways and learn how to benefit practically from this rapidly evolving field.

Steven Minsky

Steven is the CEO of LogicManager, Inc. the leading provider of ERM software solutions. Steven is the architect of the RIMS Risk Maturity Model for ERM, author of the RIMS State of ERM Report among many other papers, and a RIMS Fellow (RF) instructor on ERM. Steven has conducted ERM and RIMS Risk Maturity Model training for hundreds of organizations around the globe. Steven is a patent author of risk and process management technology and holds MBA and MA degrees from the University of Pennsylvania’s Wharton School of Business and The Joseph H. Lauder Institute of International Management. You can reach Steven at steven.minsky@logicmanager.com.

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