Is crisis the new normal? 

It can feel that way. Climate change, cybercrime, the Covid-19 pandemic and political uncertainty all seem to vie for the top headline spot, almost daily. 

Add to that the growing weight of regulation in financial services, the rapid dissemination of news (including the fake variety) through social media, and the rapid changes in workplace culture (hybrid working, expectations of Gen Z employees). 

It’s a potent mix that, if not handled correctly, could seriously sour your day; which is why you’re considering your enterprise risk management framework. 

Enterprise risk management explained 

Risk management is fundamental to effective governance of organisations and it’s not just about protection from something going wrong. Risk management is forward-looking. It supports management decision-making, strategy development and improved business operations. 

Risk management is about protecting customers, employees, shareholder value and brand reputation. It’s also about doing business well because taking risks is part of doing business. 

Enterprise risk management is the continual process of identifying, quantifying and managing all the risks in your business, in a consistent and coherent way. It operates across the entire organisation, from the board of directors to every member of the team. With an enterprise risk management framework you have a system, a process, for handling the different aspects of risk at these various levels. Roles and responsibilities are defined, actions are timetabled and recorded, documents are created and stored, and there’s a clear view of risk across the operation. 

Establishing your enterprise risk management framework 

Shaping your risk culture 

Risk culture is about attitudes to risk and governance, including risk strategy and risk appetite. Every organisation has a risk culture – the challenge is to make sure it’s the right culture, where risk is recognised for what it is and managed appropriately. 

It’s the responsibility of those at the very top to set the tone for the rest of the organisation. It’s from here that the organisation’s appetite for risk is determined and approved, and strategic management decisions around risk are taken. 

Without the right culture in place, it’s going to be hard to keep everyone risk-aware or implement the day-to-day operational processes and reporting structures needed to support effective management of risk. 

Determining roles and responsibilities 

Everyone should be clear about what’s expected of them regarding risk management – from the CEO and board, down to every member of the team. 

This starts with having a common methodology and language around risk. While the scope and specific terminology may change at different levels in the organisation, everyone should be alert to the risk of potential for loss, or for reduced opportunities for gain, in whatever form is relevant to their place in the operation. 

A strong culture of proactive risk management recognises that everyone has a part to play. It’s not just the role of compliance or internal audit teams to protect against something going wrong. Every team, business unit, and department needs to understand what’s required of it and take ownership of its responsibilities. 

Implementing appropriate systems 

Effective and efficient risk management across the enterprise requires systems and processes to manage and collect data, in a way that’s consistent and provides appropriate visibility at all levels. Today’s digital technology tools make this easier, but without strategic planning, the information can become fragmented, giving scope for both duplication and gaps. 

Establishing these systems requires a clear definition of what risks are to be addressed, along with reporting requirements (both for internal management and external regulators and other stakeholders), and the technologies to be used. 

Setting up risk management processes 

The effectiveness of your enterprise risk management depends not only on the processes you set up but also on how effectively these are carried out.  

These processes will include: 

  • Identification of risks. 
  • Measurement of impact. 
  • Ongoing monitoring. 
  • Response to risk events. 
  • Ongoing assessment and controls. 

Your risk management processes will undergo evolution over time, as circumstances change and your evaluation processes identify the need for adjustments. 

How 1RS supports your enterprise risk management framework 

Building risk resilience in your organisation requires both strategic management and the systems needed to implement your management vision. While these systems are necessary to protect the value of your business, they shouldn’t be so demanding of your resources that they distract from the vital day-to-day business operations. Your people need to be working on adding value, while also doing what’s needed to protect that value. 

Our clients benefit from a proven governance, risk and compliance toolset that automates risk management activities. 

Designed and maintained by risk and compliance professionals, our solution can be adapted to the operational risk and compliance framework of any organisation. 

The solution includes: 

  • Regulatory rule mapping. 
  • Policy attestation. 
  • Compliance approval management. 
  • Automated alerts. 

It operates through an intuitive interface with interactive dashboards, meaning it can be tailored to your needs. 

No more risk management spreadsheets 

In our experience, heavy use of spreadsheets is evidence of fragmented and time-consuming risk management processes. By implementing our system, and doing away with all these standalone documents, our clients are able to put more resources into running their businesses. Having a single set of data from across the organisation allows for much faster reporting and assessments of risk management performance. 

We make it easier to implement effective enterprise risk management, using the latest methodologies and technology tools. To learn how we can help you do that, get in touch.