I recently came upon a study that was looking at the current state of enterprise risk management (ERM) and I found some of the findings to be quite interesting. Forrester, a research organization, surveyed 360 risk professionals on the current state of enterprise risk management. The findings were compelling in that risk concerns are on the rise yet risk professionals are dealing with some pretty major challenges to adoption of ERM processes.
For example, 64% of North American survey participants stated they had seen an increase in risk and 44% of overall participants said enterprise risk had increased over the last year. This shows that a post-COVID world is more complex and uncertain than ever when it comes to businesses attempting to meet their objectives, regardless of industry. Survey data such as this helps solidify the need for risk intelligence to support decision making in a rapidly evolving and volatile networked economy.
One interesting area of the survey was the current challenges risk professionals are facing, the top responses are included below:
Impedes on innovations (27%)
Slows down decision-making (24%)
Lacks strategic alignment (17%)
These responses are interesting as we know from the increase in overall risks businesses are facing there is a need for structured ways to of discussing and responding to risks that can impede on executing business plans. However, these same needed processes are seen as defeating the core purposes they seek to achieve.
Enterprise risk management is not about managing risk, but helping to manage success by establishing a consistent and standardized approach to identifying, assessing, managing, and measuring key risks that can cause unwanted deviations to achieving objectives. If this process actually slows down decision making this would show an immediate need to reevaluate how risk management processes are performing.
RIsk management should actually help fuel innovation by promoting healthy discussions on risks that can impact achieving the alternate future that we seek, whether it be one of sustainability, profitability, or some other end objective. It also needs to align with strategy at every point in the process. If a risk professional ever feels the process is swaying away from helping the business achieve its objectives and maintain regulatory compliance than a moment should be taken to refocus the approach to ensure it is fully aligned with helping the business reach its definition of success.
I found these survey results to be interesting in the current challenges we risk professionals face when trying to persuade adoption of the an enterprise erisk managementframework and overall methodology. In the end, we must keep fighting the good fight as healthy risk discussions drive the needed action to help meet objectives and optimize operational performance. A win-win every business leader can get behind. Until next time…
-CR
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