The Risk and Insurance Management Society has been discussing the benefits of Enterprise Risk Management (ERM) for over 10 years now. In addition, they have developed the discipline of Strategic Risk Management (SRM) within the courses and material they publish. To them, ERM seeks to dial down the volatility in the operations of any organization, while SRM is meant to evaluate whether the company’s business strategy on risk is appropriate and provides long term sustainability of the company’s profits. Thus, if implemented correctly, ERM allows SRM to take a critical and impartial view on the way the company does business and mitigates risk.
A recent article on the RIMS website entitled “Connecting ERM, Strategic Risk Management, and Sustainability”, by Nicos Scordis, touches on this exact issue. The article discusses how ERM must be able to adapt and be tailored to each specific organization as “there does not seem to be a one-size-fits-all solution” for ERM. This means when a company is looking at Risk it must compare against its competition and ways that they can not only meet the competitors’ performance, but exceed them as well. The phrase that RIMS uses to describe this process is “Keeping Up With — Then Surpassing — the Joneses.” Thus ERM becomes not only a tactical decision, but is incorporated into a company’s strategic model which allows it to become a sustainable and profitable organization.
The key word here is sustainability, because the question is not whether your company is profitable during a good economy, but rather it is whether your company can turn profits even during a struggling economy. This is the true definition of long term success. The ALS Group sees that in order to ensure long-term success a company should take a Three-dimensional approach to risk and espouse the philosophies supported by both Enterprise Risk Management and Strategic Risk Management. Both of these disciplines allow for complete transparency in the evaluation of risk, which lets risk to be turned into an opportunity. We believe in working one-on-one with company leadership to evaluate, analyze and improve processes throughout the organization; this includes performing a Risk Assessment, developing a Disaster Recovery Plan, and providing a thorough Risk Review for any business opportunity.
If you would like to discuss the ERM process or possible ways to evaluate and mitigate your company’s risk further; please feel free to contact The ALS Group for more information.