Enterprise risk management (ERM) is not a task for the faint of heart. Yes, many risks can be effectively managed in-house. But according to author Lawrence Richter Quinn in a post for Risk Management Magazine, the chips on your side of the table are in the same pot as the next organization when it comes to risk. Quinn lists four ways for the ERM diplomat to make sense of their duties.
No. 1 – Selling Risk Internally
Within a single company, the ERM may be looking at several separate and far ranging endeavors, whether from units, line managers, subsidiaries, or long distance silos. The task at hand may seem daunting, but in this case the strategy of ‘divide and conquer’ is wholly applicable. The first step is executive buy-in.
No. 2 – Identifying the Risk Leader
The task of roping in the appropriate executive risk leader requires a feat of superhuman persuasion. However, not to be mistaken, a good ERM leader possesses ‘soft traits,’ what chairman Bruce Blythe identifies as humility, teach-ability…empathy, empowerment,…and conviction to core values, among others.
No. 3 – Enforcing Risk Strategies
Once buy-in is achieved, the next feat of ERM involves trust building – lots of it:
One way to do that is by having thorough, intensive conversations with the business units, understanding how they view risks, what they are doing to manage them, and what frustrates them.
No. 4 – Converting the Doubters
When resistance to ERM is encountered, it’s a signal to set aside parallel efforts and to focus on one silo at a time. Perhaps the unit in question is self-assured about their risk management tactics, but unaware of the broader impacts and vulnerabilities.
No. 5 – Managing Risk Abroad
Sometimes offices or departments are just waiting for an ERM to assist in risk compliance that must otherwise be sought from outside sources. By helping auditors and accountants streamline their risk management tasks, you’re doing their executive a favor by eliminating extraneous costs.
The full article can be read at: http://www.rmmagazine.com/2014/11/01/erm-diplomacy-2/