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 What is ERM?

The risk management discipline has evolved over the years into a concept called enterprise risk management (or ERM).

ERM is the framework organizations look to put in place to address all the risk management needs across and up through the organization in a structured, common manner, in order to be able to measure, aggregate and assess the relationship of this information on an enterprise basis.

It is providing the ability to do this that offers business the greatest benefits.

Each risk vertical, whether it be for projects, corporate risk, heath & safety, environmental, financial compliance or reputation and legal risk, will add value to the business when deployed correctly.  Whilst many solution vendors in the market offer specialist solutions to these specific area’s of risk management, none are able to assimilate and integrate these areas with each other and with the organization as whole.

To us, the value obtained from approaching these areas separately is limited. Once deployed in a silo, the information is then very difficult to extract and then assess alongside the other risk information. The real value is being able to assess all risk information in a common and consistent way: this allows you to identify inefficiencies through duplication, benefit from existing knowledge and controls,  and assess the real aggregated risk exposure of the business to key events for instance.

By being able to bring all this information together questions such as the following can be answered:

• "am I over-controlled and what controls are delivering the greatest value?"
• "if I wanted to reduce my insurance premiums how would I do this?"
• "why do most of our projects fail to deliver on time?"
• "how do I find out if we are compliant with all European and Industry regulations and if not what we are doing about it?"

Interested? Want to learn More? Read on!

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Effective ERM requires a risk vision, framework and taxonomy so that as each new risk vertical is added, the information and structures already in place can be re-used.

This reduces administration and increases the aggregated value of the information to the rest of the business.

For example the identification of project based risks will lend value to the Health & Safety managers in identifying specific H&S risks relating to these projects, and a mitigation action carried out by corporate risk managers to secure a warehouse 24*7 to address the risk of terrorism may be able to benefit an asset manager looking to address the risk of theft of plant and machinery, or a key account manager in knowing that the security firm they used is also a major customer and therefore could be treated as an opportunity to secure further business.

We see these structures as being very similar to the structures accountants have received benefit for many years from general ledger accounting systems, whereby the structured chart of accounts and account coding has enabled financial information to be analysed in many different ways to provide answers to important business questions.

In summary, specialist verticals of risk management benefit the business. The immediate needs for these should not be dismissed when they occur whilst a business is waiting for the ultimate "corporate ERM strategy". On the other hand having a risk management framework and solution in place able to deal with any of these specialist needs when they do occur, offers the business significant advantages in reducing costs, increasing opportunities and delivering value that would otherwise be unachievable through the aggregation of risk and mitigation information to the enterprise. Our Closed-Loop Risk Management product strategy is designed to deliver such a solution, ready out of the box for customers to benefit from for their first vertical risk need.