Understanding why something is done is an important part of cultivating and maintaining commitment…
Research is showing this to be true for an increasing number of employees because time is precious for everyone, especially for company leaders.
In most cases, “why” is an easy question to answer, especially when it comes to day-to-day operations. In other areas like strategic planning and ERM, the answer may not be so clear.
It’s not that the strategy and ERM practitioners don’t have an answer to this question; it’s that their answer is typically incomplete or disconnected.
Many companies keep these areas separate, which is one reason why few company leaders find value in their ERM processes. Most still see it as something for satisfying regulators and are simply not aware that it can also be a tool for informed decision-making around a company’s strategic goals and how to accomplish them.
However, ERM thought leaders (Tim Leech, Hans Læssøe, and Norman Marks, to name a few), along with top risk management standards like ISO 31000 and COSO, have been gradually shifting to an approach that merges strategy and risk. Known as ‘objective-centric ERM,’ this next generation approach replaces risk lists with various tools aimed at helping a company take informed risks in pursuit of objectives.
Originally appearing in the journal Carrier Management, the article linked below dives into the reasons why companies should merge risk into their strategic planning, plus explores the various tools that can be harnessed to ensure the company has the right goals and is taking the right amount of risk in pursuit of those goals.
If your company is still practicing a previous generation of ERM focused on creating lists of so-called top risks for regulators and otherwise playing it safe, learn steps you can take to start moving in this more ‘objective-centric’ direction.
Like previous articles from Carrier Management, this article speaks to executives of P&C insurance carriers, but the concepts presented within it are applicable to any company in any industry.
The Merger of Strategy & Risk: Understanding the Why
What is your company’s approach to risk management – focused on the risk list or achieving a specific objective?
We’re interested in hearing your thoughts, which you can share by joining the conversation on LinkedIn.
And if your company is looking for ways to shift the focus of its ERM program from something it does to “check-the-box” to being a valuable tool for ensuring success, please reach out to discuss your situation, goals, and potential options for helping you achieve them.
