How to Successfully Implement an Enterprise Risk Management System
For most organisations, utilizing an Enterprise Risk Management (ERM) software could be a daunting task. In the modern world, analytics is a great asset in risk management systems using sophisticated technological tools and an abundance of data.
As a result, potential risks that could affect your company’s workflow can be easily detected. Thus, insights and actions are hence provided concerning how to make corrections.
Based on knowledge and experience, business owners understand that an effective ERM is majorly about capturing, analyzing and responding to risks but how can they align their assets and goals that will lead to great organizational management? And what kind of processes and mechanisms are required in reporting risks?
This article explores the answers and many more.
How Every Company can successfully implement an Enterprise Risk Management System?
The following are 5 ways that organizations can create business values by identifying risks through an effective and enhanced enterprise risk management system:
1) Support from the Top management: When those who are at the apex section of a company see no importance of risk management, there’s no way real investment in this area can be achieved. Thus, to successfully implement a formal process for an enterprise risk management system, there has to be committed personnel who are willing to proactively manage risks. This personnel includes everyone starting from the board, CEO and other senior managers. Thus, when there’s support from the top, the probability that an ERM system will be used more effective will be high.
2) Educate the staffs on all levels: It’s important to educate your staffs about the relevance of an effective ERM system and why it must be implemented. For effective result, this knowledge is required to be communicated to all levels in the company. This communication creates a risk awareness culture among them which is then embedded into their day-to-day operations. Likewise, it also promotes an accountability culture and ensures that the mechanisms that will be utilized to report risks are clear enough. This training process can occur annually or quarterly as the management deems fit and should be made mandatory for all staffs and sub-contractors.
3) Awareness that the ERM system is a continuous process: To implement an ERM system, you need to know that the process is ongoing on rather than a one-off exercise. So it doesn’t suffice for anyone to conclude after noting the company’s risks into writing that it all ends there till next time. In fact, no true successful program happens all at once. It involves a continuous collection of data and monitoring. More so, regular review of risks and updates will ensure that adequate resources are allocated appropriately for proper and effective management.
4) Identify the risks with huge threats: To improve your company’s business performance and governance there’s a need to focus on the most pressing risks. What do we mean by this? Time is of the essence in the business world so it’s considered a waste of time and effort when attention is given to a risk of less importance when urgency is needed at more important matters. Hence, the risks that have a high impact and tendency to occur should be given priority.
5) Provision of periodic progress reports: There’s a need for risk owners to have regular updates on the attainment of milestones specific to key enterprise risk management objectives. These reports highlight matters like the comparison between risk profiles and the targeted outcome, material risks, and ERM system progression.
Obviously, there is no doubt that complying with the demands of an ERM system is a great opportunity to empower your company. To successfully implement a good risk management program in your company, all you have to do is to adhere to our above mentioned systematic ways.
You can make this possible by starting a free trial of our enterprise risk management system safety software.
Related Articles You Might Also Like: