Question

Explain the best approach to ensure successful implementation of ERM? Please provide a few different elements.

Answer 1

ERM differs in traditional approaches to oversight risk management. ERM emphasizes a top-down, holistic view of key risks potentially affecting an organization’s ability to achieve its objectives. here are some best approach to ensure successful implementation of ERM -

1. Get buy-in from the top. ERM must start at the top with the board and CEO, and include the senior management team being committed to implementing a formal process and proactively managing risks. Also ensure that the importance of ERM and why it’s being implemented is communicated to all levels in the organization.
2. Talk with your CFO. As financial leaders, they are already deeply involved in managing traditional and financial risks, and thus play a critical role in understanding how a structured way of managing business risks will better help to identify and mitigate issues that can take your organization off track.
3. Perform a risk process inventory . Take a look at what your organization is already doing to mitigate risk to avoid duplication of efforts. Your organization may already be doing a quite a bit in the risk area, so when you implement a program you won’t necessarily need to engage in a whole new set of activities that’ll increase the team’s workload.
4. Adopt a framework. Research and adopt a risk management framework that works for your organization. The framework suggested by COSO is a robust and popular version.
5. Pinpoint the biggest threats . Work across the enterprise to identify the risks which have the highest impact and the highest likelihood to occur. This will allow you to focus on major target areas instead of putting effort on every little risk that doesn’t represent a big threat. Use tools such as the CGMA Risk Heat Map to make this process simple.
6. Keep processes up to date . Implementing an ERM process is not a one-off exercise. Review the risk registers and mitigation plans regularly to keep them up to date and ready for deployment.

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