Engaging Business Unit Leaders in Discussing Enterprise Risks
Paul Zavolta, Director of ERM at Alpha Natural Resources, provides an overview of how ERM is treated at Alpha Natural Resources. He speaks of how he feels the company’s top-down and bottom-up approach has been most effective in assessing all risks to the company, whether they be faced by people at the top or bottom of the organization. He also speaks to the day-long workshops that Alpha does to ensure that risk is talked about among all aspects of the business.
Key Points:
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Formalizing Risk Management: Zavolta discusses the importance of formalizing enterprise risk management (ERM) processes, noting that many organizations mistakenly believe their informal practices (e.g., daily discussions and open culture) effectively manage risks. Formalized processes, like structured workshops, help ensure risks are properly identified, prioritized, and addressed.
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Deep Dive Workshops: Zavolta highlights the benefits of deep dive workshops, where senior executives collaborate to assess key risks. This approach allows them to identify gaps, develop actionable treatment plans, and assign accountability for managing specific risks.
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Effective Risk Identification Techniques: Zavolta suggests a combined top-down and bottom-up approach for risk identification. Workshops involving diverse groups within the organization encourage collaborative brainstorming, ensuring a thorough analysis of risks and opportunities.
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Overcoming Reluctance to Discuss Risks: Zavolta emphasizes the importance of leadership’s support in fostering transparency. At Alpha Natural Resources, the executive team’s endorsement of ERM created a culture where management felt comfortable openly discussing risks.
Conclusion:
The discussion underscores that a formal, structured ERM process—supported by top management—is crucial for effectively managing risks. Collaborative workshops, a combined approach to risk identification, and a culture of openness foster a more thorough and accountable risk management strategy. The success of ERM initiatives depends on leadership engagement and transparent communication about risks.
Original Article Source: “Interview Transcript with Paul Zavolta on Engaging Business Unit Leaders in Discussing Enterprise Risks“, Paul Zavolta, October 2012
