Enterprise Risk Management (ERM) for Confident Leadership

Gaining an Aerial View of Risk Exposures

As a leader, you carry the tremendous responsibility of steering your organization toward achieving strategic goals and fulfilling its purpose. But in today’s increasingly volatile and uncertain business landscape, new obstacles seem to emerge at every turn. Your ability to make smart risk-informed decisions is critical to long-term success.

Enterprise Risk Management (ERM) equips you to take a proactive stance on managing risks across your entire organization. Rather than siloed risk management within specific departments, ERM provides an aerial view of the diverse risks that could impact objectives. With greater visibility into interdependencies, exposures, and your overall risk profile, you can make educated trade-offs. Resources can be allocated where most needed to fuel growth.

Overeview

The core idea behind ERM is that risks should be managed in alignment with your organization’s risk appetite. All companies face risks – but smart firms take on the right risks. Defining risk appetite enables you to quantify whether a risk falls within tolerable parameters.

ERM expands traditional risk management by looking beyond daily hazards and compliance factors. The scope encompasses both external and strategic risks. For example, how would a new competitor disrupting your industry impact plans? Or how could a strategic acquisition designed to spur growth expose the company to new risks?

An effective ERM program integrates risk management into your strategy-setting process. By considering potential risks upfront, strategies and plans become stress tested. When risk management connects directly to decisions that impact objectives, organizations become more agile and resilient.

Benefits

Implementing an Enterprise Risk Management program offers a multitude of benefits:

 

Improved Risk vs. Reward Decisions

With ERM, you gain a holistic view of risk exposures across the company. Risks become quantified based on criteria such as likelihood of occurring and potential impact.

Armed with data-driven risk intelligence, your decision making improves. You can evaluate whether a given strategic opportunity is worth the associated risks. Resources can be allocated optimally to maximize returns for a given risk appetite.

 

Increased Business Resilience

Taking a proactive stance on risk management boosts organizational resilience when disruptions occur. ERM expands your capacity to anticipate potential scenarios and stresses. Preparedness translates into agility.

Ongoing monitoring further enhances resilience by providing an early warning system for emerging risks. With heightened risk awareness across the enterprise, your company becomes adept at navigating storms. Risk management transforms from reactive fire drills to strategic capability.

 

Stronger Organizational Alignment

One of the most powerful impacts of ERM is cross-functional coordination. Risk management moves from being siloed within certain departments to an enterprise-wide capability in which everyone has skin in the game.

With improved transparency and communication around risks, different units become aligned. Duplication of risk management efforts is reduced as well. ERM provides a common risk language that connects the organization.

 

Competitive Advantage

Proactive risk management translates directly into strategic advantage. With ERM insights, you can pursue value-creating opportunities that competitors may shy away from due to excessive risk-aversion.

Accepting smart risks unlocks growth. As an example, entering a new geographical market involves risks but also significant expansion potential if executed deliberately. Risk-intelligent strategies give your company an edge.

 

Enhanced Stakeholder Confidence

Transparent and quantified efforts to manage risk across the enterprise reassure stakeholders. Investors gain trust in leadership when risks are handled strategically rather than reactively.

Communicating ERM programs demonstrates your commitment to responsible risk taking and long-term sustainability. This confidence effect can positively impact reputation and valuation.

 

Regulatory Compliance

In regulated industries such as financial services and insurance, regulators obligate enterprise risk management. But even beyond formal mandates, regulators expect evidence of risk management programs proportional to size and risk profile.

Integrated ERM provides assurance that prudent steps are taken to govern risks. Quantified analysis also delivers data points often requested in regulatory assessments and filings.

The bottom line? ERM adds tremendous strategic value, strengthening your organization for the long haul. Let’s explore how to build a tailored ERM program.

Service Details

This ERM service encompasses the following components, customized to your needs:

 

Risk Management Infrastructure

We help design and implement the infrastructure needed to enable enterprise-wide risk management. Key elements include:

  • Risk management policy – We help craft a policy that defines ERM methodology, governance, and integration with strategy-setting.

  • Risk committee – We advise on establishment of a risk committee, including defining roles, responsibilities and reporting structure.

  • Risk roles – Clarify roles and responsibilities for risk management at the board, executive, management and staff levels.

  • Technology enablement – We help select and implement risk management software tools for efficiency and consistency.

 

With the right infrastructure in place, you have a solid foundation on which to build ERM capabilities.

 

Risk Identification

A crucial first step is identifying the universe of potential risks that could impact the organization’s objectives and performance. To create a comprehensive risk inventory, we use techniques including:

  • Interviews with senior leaders and subject matter experts

  • Surveys distributed across the enterprise

  • Risk assessment workshops with cross-functional representation

  • Data analysis including internal audit reports and metrics

  • Benchmarking against common risks by sector and peer analysis

 

The output is a risk register cataloging the landscape of risks segmented by internal, external, operational and strategic factors.

 

Risk Analysis & Scoring

With risks identified, we support analysis of each risk to understand likelihood, impact, and overall exposure levels. Risk analysis requires nuanced consideration of factors like:

  • Probability of occurring within a set timeframe

  • Quantitative financial impact if it occurred

  • Reputational impact and brand damage

  • Duration of impact

  • Stakeholders affected

 

We work collaboratively to define risk scoring criteria and scales tailored to your appetite and objectives. The result is an accurate quantitative risk profile.

 

Risk Mapping

A key ERM deliverable is development of visual risk maps that illustrate the big picture view of interrelated risks. Maps are segmented by risk themes and categories with data such as:

  • Risk scoring metrics like probability and impact

  • Risk interdependencies

  • Controls and mitigations in place

  • Risk owners and managers

 

These living documents are updated dynamically as the risk landscape evolves over time. The maps become an invaluable strategic tool.

 

Risk Mitigation

Where risks exceed acceptable levels, we identify options to reduce the likelihood and/or impact. For each top risk, we outline mitigation tactics such as:

  • Risk avoidance – Altering strategy or objectives to eliminate sources of risk.

  • Risk reduction – Enhanced controls to reduce probability and/or impact.

  • Risk sharing – Transferring risk exposure to an external party like an insurer.

  • Risk acceptance – No action taken due to alignment with risk appetite.

 

The goal is to lower risks to acceptable range based on your strategic priorities. Recommended mitigations take into account cost-benefit trade-offs.

 

Risk Monitoring & Reporting

An ERM program requires ongoing vigilance to detect changes in existing risks as well as emergence of new risks. We design:

  • Key risk indicators – Metrics monitored for changes that act as early warning system.

  • Control testing – Process for regularly evaluating effectiveness of risk controls.

  • Risk scans – Cross-functional risk assessments conducted periodically to identify new issues.

 

We also establish reporting procedures to keep senior management and the Board apprised of ERM program status on a regular cadence.

 

Risk Integration with Strategy

The end goal is to embed risk management into your strategy-setting and planning processes. We help integrate ERM data into key decisions such as:

  • Strategic plans and annual budgets

  • New initiatives and projects

  • Mergers, acquisitions, and divestitures

  • New market entry or geographic expansion

  • Business continuity and crisis planning

  • Resource and capital allocation

 

By integrating ERM insights directly into decision making, you drive alignment with risk appetite and strategic objectives. Risk management transitions from side process to core capability.

 

The Process

Successfully implementing enterprise risk management involves the following key phases:

 

1. Prepare the Foundation

  • Clarify business objectives, risk appetite, and stakeholder requirements

  • Define the scope, timeline, budget, and project governance

  • Review existing risk management activities as a baseline

  • Secure senior management sponsorship and commitment

 

2. Design the ERM Framework

  • Create a risk management policy and charter

  • Establish a risk committee with defined responsibilities

  • Select methodologies, tools, and templates that enable consistency

  • Develop procedures for risk identification, assessment, monitoring, reporting and more

 

3. Identify & Assess Risks

  • Use multiple techniques to identify risk universe across the enterprise

  • Analyze and score each risk based on defined criteria

  • Map risks, interdependencies, and risk profiles across units

 

4. Develop Risk Responses

  • Identify cost-effective ways to avoid, reduce, transfer or accept top risks

  • Assign accountability for implementing risk response activities

  • Develop contingency plans for crisis scenarios

 

5. Monitor, Report, & Communicate

  • Establish procedures to continually monitor top risks and emergent risks

  • Define risk reporting frequency, audience and metrics

  • Communicate ERM program status across the organization

 

6. Integrate ERM into Strategy

  • Incorporate risk analysis into strategy setting, planning and resource allocation

  • Make risk-intelligent decisions aligned with risk appetite and tolerances

  • Break down silos so ERM becomes a shared enterprise capability

 

7. Review & Iterate the Program

  • Conduct periodic evaluations of ERM framework and adjust as needed

  • Update risk registers and reporting continuously based on new events

  • Foster a risk-aware culture through training and incentivization

 

The process is repeated on an ongoing basis as the ERM program evolves. With a rigorous and consistent approach, your organization reaps the benefits of becoming risk-smart.

FAQ'S

How long does ERM implementation take?

The timeframe depends on the size and complexity of your organization. Most initial implementations take 6-12 months. Mature ERM programs are then sustained as an ongoing business process.

Active participation by leaders across the enterprise is crucial for success. We supplement your team with specialized expertise while also building internal capabilities.

We employ a range of techniques including leadership interviews, staff surveys, workshops, audit analysis and industry benchmarking. The goal is a comprehensive risk inventory tailored to your situation.

Our multidisciplinary team includes professionals with deep risk management expertise across diverse industries. We take a practical approach grounded in hands-on experience.

We quantify each risk using data-driven scores for likelihood, business impact, reputational impact, and more. Criteria are customized based on your risk appetite and strategic context.

Definitely. Environmental, social, and governance factors can be built right into the risk identification, assessment, and prioritization process.

Defined procedures for continuous monitoring, control testing, and threat scans feed new risk data. Standard workflows process risk updates to keep visibility fresh.

Absolutely. We provide access to leading GRC software platforms that can be configured specifically for your ERM program.

Yes, we provide onboarding and training to equip your team to sustain ERM capabilities for the long haul. Knowledge transfer is a key objective.

We take a multifaceted approach including leadership messaging, incentives, risk-based performance metrics, and ongoing education to foster enterprise-wide engagement.

We establish quantitative KPIs as well as qualitative assessments by leadership and the Board to track ERM value over time. Impact is demonstrated through enhanced decision making capabilities.

Costs vary based on program scope and complexity. We take a phased approach and offer flexible ongoing support at various service levels based on needs.

We hope this overview demonstrates how Enterprise Risk Management can become a game-changer for your organization. Please reach out to start a conversation about building your ERM capabilities. Our experts are eager to partner with you for future success.

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