Everyone wants to be successful, right?
That’s a rhetorical question…
While we all would say yes to that question, achieving success takes more than a wish. Running a company smoothly, much less achieve long-term strategic goals, is more challenging than ever in today’s VUCA world.
Thankfully, tools like enterprise risk management (ERM) can help a company navigate this challenging landscape. However, both surveys and personal conversations confirm that many companies struggle to harness this tool effectively, with many believing it is simply a compliance exercise or limited to financial risks.
As we stress often in many articles on the blog, ERM should NOT be about risks in the negative sense, but instead about increasing confidence the company can achieve its goals.
Unfortunately, there is a dangerous perception that certain ERM practices should be used only if the company is a certain size or sense of complexity.
Many company leaders will either say they are too small to practice objective-centric ERM OR because the company is large or highly complex, their ERM practices should be formal and move along at the same annual rhythm as the rest of their formal practices.
But as we explore in more detail in today’s article, outside of a few exceptions, fundamental ERM practices can and should be practiced regardless of the company’s size. The big difference is not so much the practices, but instead the complexity of the risks.
The Carrier Management article (linked below) provides three steps that an executive or ERM practitioner at any company can take immediately to harness ERM in a way that increase the confidence that the company’s goals will be met. Recognizing that there are always exceptions to the rule, we also identify a couple carveouts that apply to smaller companies but should NOT prevent a company from embedding risk into its strategic and daily decision-making.
Just like previous SDS articles featured in Carrier Management, examples and some industry-specific terms apply specifically to the insurance industry. However, the ERM and decision-making concepts are relevant to companies of any size in any industry.
Should Company Size Determine a Carrier’s ERM Practices?
What other ERM practices can companies include regardless of size?
Please join the LinkedIn conversation to share your thoughts.
