Is it time to give your enterprise risk management (ERM) program a checkup? Work through these risk management categories and questions to perform a quick assessment of your organization’s ERM practices.
An effective enterprise risk management program offers significant benefits for organizations: better decision-making, increased efficiency, enhanced risk control. However, a poorly managed program may increase uncertainty and risk exposure.
Review 10 important aspects of a successful ERM program and see how your risk management practices measure up:
How accurate and consistent are your processes for identifying, categorizing, and managing the risks that affect different parts of your organization?
Why it’s important: Management will begin to see different facets of risk across the organization. The ERM process will serve as a way to connect those risks, effectively respond, and coordinate mitigation efforts.
How well are you assessing strategic alternatives and developing abilities to manage associated risks?
Why it’s important: Aligning your organization’s risk appetite with strategic alternatives will improve your overall ability to set objectives and recognize the risks impacting them.
How are you currently analyzing your risks? Are you considering risk impact and likelihood?
Why it’s important: Utilizing likelihood and impact in your risk assessments sets a foundation for defining how much gross or inherent risk is critical.
Are you developing mitigation actions that align with your organization’s risk appetite?
Why it’s important: Effective enterprise risk management allows organizations to determine the best risk response. In turn, this provides the needed guidance to develop the best mitigation strategy to implement and track to completion.
Are you establishing control actions that align with your risk mitigation strategies?
Why it’s important: Establishing the appropriate procedures and/or policies that align with your mitigation strategies helps to ensure that the control actions are effective.
Do you have a methodology for recognizing and selecting alternative risk responses?
Why it’s important: Making the determination to share, avoid, accept, or reduce risk in alignment with your organization’s appetite will improve your success in managing risks.
Do you have effective processes for identifying potential risks and developing responses to reduce related losses?
Why it’s important: Comprehensive ERM will improve your organization’s ability to recognize potential events and determine appropriate responses to minimize or eliminate losses.
Does management use the ERM process to direct organizational objectives?
Why it’s important: Before your organization can begin to recognize possible events impacting your success, you must set objectives that align with your risk appetite and strategic goals.
Are you proactively analyzing potential events to recognize opportunities?
Why it’s important: The ERM process will assist your organization in identifying a broader range of potential events based on your strategic objectives and other metrics, putting you in a position to recognize and capitalize on opportunities.
Are you taking a holistic and ongoing approach to monitoring your risks, opportunities, controls, and mitigation efforts?
Why it’s important: Recurring assessments, control action completion, management engagement with the overall ERM process, and other monitoring activities help maintain an effective and consistent ERM program.
Learn how ERM software can help your organization centralize risk management processes, align ERM activities with business strategy, leverage analytics for strategic decision-making, and more. Or get a jumpstart on maturing your program by exploring Quantivate’s range of ERM services.