ERM and business continuity need to go hand-in-handReprints
Some corporations are beginning to see the value in integrating enterprise risk management and business continuity management programs, but much more work needs to be done before such linkages are widespread.
“For us, those two things are inextricably linked,” said Christopher Johnson, executive vice president for FM Global in Johnston, Rhode Island. “I find it hard to believe that you can have an effective ERM program without paying close attention to business continuity. Equally, if you have a strong approach to business continuity without the framework of ERM, it's not going to be as effective and efficient as it could be.”
If the goal of ERM programs is to ensure a company can function after an incident such as a supply chain disruption or a natural catastrophe that shuts down a major facility, involving the business continuity team in the ERM process is critical, stakeholders said at the Risk & Insurance Management Society Inc. conference this week in San Diego.
“Certainly within enterprise risk management there are risks that you have no control over,” said Rich Michel, head of the national risk management practice at Wells Fargo Insurance in Atlanta. “But there's always something you can do in response to it and that's really what business continuity planning is about.”
However, one of the challenges to such linkages emanates from the traditional silos built up within organizations and the different disciplines of these teams, with business continuity planners generally coming from the engineering field and ERM staff having financial, accounting or auditing backgrounds.
“They see their skill sets as being different, and therefore what we do at ERM is not what they do at BCP and vice versa,” Mr. Michel said. “The first thing you have to do is agree on a common language. I think you do that by inviting BCP people into the ERM process from the very beginning.”