Wolters Kluwer: Impact Strategy And Shape Conduct: Pushing Your Enterprise Risk Management
Posted: 27 May 2011 | Source: Wolters Kluwer
Managing the dynamic tension between risk and opportunity has never been more critical for the banking, securities and insurance industries. Mounting uncertainty surrounding the global economy, new and complex regulations, increased scrutiny and oversight, and growing internal pressure to better manage risk are creating never-before-seen challenges for these organisations.
While many organisations have done an acceptable job of implementing enterprise risk management (ERM) programmes, there is still a great deal of work needed to bring them to maturity. Many organisations struggle to attain a fully-developed or well-integrated risk management function. ERM programmes are often too focused on operational and compliance-related risks and fail to target any long-term strategic goals, which are more likely to positively impact overall success. As a result, these programmes fall short of constituting a complete, robust risk management process. Additionally, existing risk management activities still tend to be “siloed” either by risk discipline and/or business lines rather than providing a true enterprise-wide view of an organisation’s complete risk picture. The information being collected is not used to drive organisational decisions or capitalise on emerging opportunities. Many organisations are re-evaluating their risk management practices because of increasing regulatory scrutiny and growing concerns over the shortcomings of current risk approaches. As ERM programmes evolve, every organisation must develop its own ERM framework based on its particular size, culture, risk appetite and business strategies. While there is no “one-size-fitsall” approach to establishing a risk programme, there are several things organisations can do to ensure they encounter minimal risks while achieving maximum benefits.