The Value of Enterprise Risk Management (ERM) to Stakeholders & How to get their support

In my previous article, I discussed the Case for Enterprise Risk Management (ERM) to an organisation. But how does it in turn add value to stakeholders, including employees, customers, suppliers, shareholders, regulators etc.?

In essence, it makes it easier to do their jobs, provides protection, creates opportunity, promotes good governance and creates transparency.

Here are 5 value-adds:

1. Better decision making

First and foremost, a risk management programme enhances decision-making by providing a comprehensive and consolidated view of risks in a digestible and understandable format.

2. Strategic alignment

In line with better decision making, the ultimate objective is priortising strategy and the achievement of commercial objectives by providing a framework for navigating uncertainty and timely risk information necessary to their pursuit.

3. Commercial integration

ERM prioritises the development of a risk appetite statement that aligns strategic objectives across the organisation and among stakeholders. It integrates risk appetite into daily business decisions and therefore provides commercial integration of risks to ensure a holistic and comprehensive process.

4. Identifying opportunities

Opportunity is synonymous with risk. In managing risk, stakeholders can take advantage of unanticipated opportunities by identifying emerging opportunities, such as market trends, competitive developments, or technological innovations, and adapting their strategies accordingly to capitalise on them.

5. Enhanced transparency

Transparency is enhanced both from the perspective of those within and outside the organisation. Those within the organisation get are better informed, have a solid framework, become more efficient and operationally resilient. Those outside gain comfort that safeguards are in place, risk culture is prevalent, and risks are monitored and reported against.

Successful ERM implementation depends on a positive risk culture which in turn relies on support from stakeholders. The importance of ERM has been laid out in this article and my previous one but getting your stakeholders on side requires various strategies. Here are a few you can implement:

• Identify the key stakeholders in your organisation and be fully cognizant of their needs and wants.
• Identify any potential blockers both from an individual and policy perspective. Engage these at the earliest opportunity. For the individual(s), do this on a 1-1 basis to build rapport, incorporate their feedback and bring them along the “journey”.
• Seek allies within the stakeholder groups to serve as advocates for your programme.
• Establish tollgates or checkpoints throughout the process to keep stakeholders engaged and keep your messaging consistent.
• Tailor and focus your communication to your audience and their individual needs as well as the wider collective benefit of strategic alignment.
• Provide real examples of what can go wrong, how ERM has solved the problem(s) and ultimately what good looks like.
• Clearly articulate that ERM is a continuous process and that its impact will be measured, monitored and reported.

Ghassan Zeidan, Founder & CEO of Paragon Consulting Partners

linkedin.com/in/ghassan-zeidan

Risk Management, Internal Audit and ESG Consulting Firm (paragonconsulting.partners)