Beyond compliance: Properly leveraging ERM for additional value
INSIGHT ARTICLE |
Enterprise risk management (ERM) is a successful approach for managing risk, but it is often not utilized to its full potential. While companies are under pressure to focus risk management efforts on compliance and regulatory demands, a more holistic strategy can leverage ERM to drive additional business value.
Many companies do not understand the strategic and organizational value ERM can present in addition to its compliance benefits. With proper planning and execution, ERM can be a strategic differentiator and creating additional opportunities and business value. An effective process allows executives to proactively apply the company’s risk appetite against strategic objectives and realize a higher return on capital through more informed risk-taking.
A complete ERM approach helps organizations shift their risk focus from strict compliance to a more strategic and operational vantage point. It encourages management to have a more explicit discussion about risk, and creates a more formal measurement and understanding of risk throughout the entire organization. ERM imbeds a new culture of risk management that creates an ongoing discussion, and a shared buy-in across the business.
Implementing a more inclusive risk culture through ERM establishes a stronger approach to risk management at each level of the organization. It increases collaboration and aligns cultures to provide a compass to avoid threats and uncover new business opportunities.