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Member, Beacon International Group, Ltd.
SAN FRANCISCO — While many organizations first embarking on an enterprise risk management program are overwhelmed by a perceived need to understand and quantify all their risks, an incremental approach to difficult-to-quantify risks is just fine, experts say.
“There are obstacles to ERM programs, and the first one is when it's all about the numbers,” said Susan Meltzer, vice president of enterprise risk management at Aviva Canada Inc. in Toronto. Another obstacle is taking a “box-ticking” approach of focusing simply on meeting compliance and audit requirements, she said.
“ERM is a continually evolving process and gradual implementation is, I think, key to our success. You can't change culture overnight,” said Morgan Keane, manager of enterprise risk management at the Port Authority of New York and New Jersey.
Ms. Keane said that as the organization set out to implement ERM, it was necessary to obtain buy-in from the top decision-makers.
“I approached the implementation of ERM as an issue campaign,” she said. “Each of these decision-makers cares about different things.”
The risk manager has to understand what each decision-maker values and communicate to them how ERM will help them achieve those values, she said.
“Once you have the buy-in, you have to build and maintain the relationships,” Ms. Keane said. “You have to demonstrate value to your different audiences so they think ERM's worth their time and they keep participating.”
The risk manager also must solicit feedback and learn from mistakes.
“Paired with learning from mistakes is you can't be afraid to make mistakes,” she said. “The overall goal is to increase maturity over time and to evolve your ERM program.”
SAN FRANCISCO — For organizations with enterprise risk management programs, the discipline is maturing into one that's adding value by helping organizations identify and prepare for emerging exposures, deal with “black swan” events and seize new opportunities.