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Picture this: You’re the captain of a massive ship, navigating treacherous waters filled with hidden obstacles and unpredictable storms. Your crew relies on you to chart a course that ensures safe passage, even when the seas get rough. This scenario is not too different from the challenges faced by modern enterprises as they sail through the turbulent waters of today’s marketplace.
Enterprise Risk Management is the compass that guides organizations through these uncharted waters. It’s a strategic and proactive approach that empowers businesses to identify, assess, prioritize, and mitigate risks that could threaten their objectives.
At Nextwealth we follow the process of identifying, assessing, and managing risks that find their roots in NextWealth’s vision and match the organizational objectives.
- It is a process that has been integrated into all levels of the organization. At the CEO Level, CxO level, Center Head level and various managers’ levels.
- We have ensured that it is an iterative process that is being continuously reviewed and improved.
- Establishing the context of organization was an important starting point and this was readily available as part of our Quality Management System
- Then mapping and finetuning of organisation objectives to Organization’s vision and to the Context of the Organization was another important activity.
- Identify risks: This involved identifying all potential risks that could impact the organization’s objectives.
- Analyze risks: This involves assessing the likelihood, impact and detectability of each risk.
- Evaluate risks: This was just an outcome of analyzing the risks and assigned a risk priority number
- Treat risks: Then each of the risks were allocated to various stakeholders by making respective CxO and Center Heads accountable for the action.
- Monitor and review risks: This involves monitoring the effectiveness of risk treatments, mitigation plans and reviewing the risk management process.
What are the benefits of implementing ERM?
- As an organization we feel more confident and have clear visibility into the identified risks
- Improved decision-making: ERM has helped us to make more informed decisions by providing a better understanding of the risks
- We have integrated ERM into the strategic planning process, allowing for a more robust and resilient strategy.
- Reduced losses: ERM has helped us to be forward looking and helped us to be prepared for any kind of losses in terms of insurance premiums, litigation expenses, and business continuity planning.
- Increased opportunities: ERM has taught us to look at risks as an opportunity
- Improved compliance to legal and statutory : ERM has also helped us to comply with regulations and standards.
- Enhanced reputation: We know that our clients have made a note of our proactiveness when we talk about ERM.
Here are some tips for overcoming the challenges of implementing ERM:
- Strong Leadership and Commitment – Senior management and other stakeholders buy in is the most important aspect in implementing anything at enterprise level. ERM is not an exception ! I am lucky as NextWealth is clear that we want to implement such an important initiative that is so forward looking and proactive.
- Secure the necessary resources: ERM requires a commitment of resources in terms of people, time, and money. We made sure that we had identified all the necessary resources in place including the time CEO, CxOs and center heads before we started the implementation process.
- Be very prompt in implementation rigor is sustained for at least two years. Follow up with all stake holders regularly is very critical
- Lastly, make it look like an enabling activity and not as a review to simply get a status update