Enterprise Risk Management: Importance & Tips for Development
Based on our recent financial outlook report, top expected risks for 2024 are surrounding labor, competition, and rising interest rates.
In order to mitigate risk and prepare to strategically tackle all 2024 has in store, it is becoming more of a necessity to develop a robust enterprise risk management strategy.
As experts in helping growing businesses navigate ever-evolving requirements and implement a risk-averse approach to growth and scale, we’ve outlined some essential information about enterprise risk management alongside some quick yet effective steps for development.
What is Enterprise Risk Management, and why is it important?
Enterprise risk management (ERM) is the process of identifying, assessing, and managing risks on an organization-wide level.
ERM activities work together to provide a dynamic, future-forward process that can adapt to the changing needs of an organization and the risks they face along their path toward growth.
As enterprise risk management strategies look at the big picture, they are helpful tools for considering how different risks interact with and impact overall business goals and help companies successfully navigate uncertainties and challenges.
Benefits of Enterprise Risk Management:
- Offers a comprehensive, proactive approach to risk mitigation on an organization-wide level.
- Helps to identify and correct issues and risks before they cause harm.
- Allows organizations to focus on high-priority risks and allocate resources to where they’re most needed.
- Helps to ensure goals and strategic plans are reachable, realistic, and as risk-based.
- Reduces costs associated with risk, non-compliance, or issues with internal controls.
- Establishes a concrete plan of action should crises occur.
Quick Tips and Steps to Develop a Solid Enterprise Risk Management Strategy:
- Establish an enterprise risk management governance structure by forming a dedicated ERM team, either with internal or external support. Define their roles and responsibilities to set the stage for success.
- Gain an understanding of key business goals and drivers by analyzing the internal and external business environment.
- Define the organization’s appetite for risk (re: the amount of risk it is willing to accept to achieve its objectives) and set risk tolerance levels for specific types of risks.
- Identify and catalogue risks across the organization. Oftentimes, it can be beneficial to seek employee feedback across all levels of the business to gain a comprehensive view of these risks and ensure nothing slipped through the cracks.
- Conduct a risk assessment to evaluate each identified risk and prioritize high-level items based on their relation to overall business goals.
- Develop strategies to mitigate risk and establish controls to protect the organization from threat.
- Integrate the enterprise risk management strategy with the overall growth plan to ensure risks are properly integrated into the decision-making process.
- Ensure all employees are properly trained to increase their understanding and awareness of potential risks.
- Establish a system for monitoring and reviewing risks on an ongoing basis to ensure the ERM strategy remains effective.
- Document the ERM strategy, including any risk assessments and mitigation plans to help instill more transparency and accountability and provide a basis for future reference.
Final Thoughts on the Importance of Enterprise Risk Management Strategies
Enterprise risk management is an ongoing process that must evolve with the changing needs and goals of the organization.
To ensure proper development, it can often be more beneficial to turn to a trusted risk expert to support the quick yet reliable identification of risks and establish a plan of corrective action.
Our team at Bridgepoint Consulting is ready to help you with:
- Identifying and mitigating risks.
- Providing an understanding of how risks can impact your organization.
- Conducting risk assessments.
- Ensuring compliance with laws and regulations.
- Creating an action plan to address the risks not mitigated.
- Implementing industry-leading IT security and compliance initiatives.
Need Risk & Compliance Support?
At Bridgepoint Consulting, we understand that it can be difficult to meet rising regulatory demands in a market rife with continually evolving standards. Whether you need help building frameworks for internal controls, regulatory compliance or sustainable governance, our experts are ready to identify and mitigate risk so you can focus on your competitive edge.
Contact us today or learn more about how we can help by exploring our services below.