Effective Enterprise Risk Management Starts with a Conversation

September 1, 2009 ERM Initiative Staff 1-min. read

With the increased pressures from shareholders for more disclosure on risk management practices, government laws and SEC regulations, many companies fear that the implementation of programs such as ERM will result in additional compliance burdens and result in little real value. However, companies that have utilized ERM have found it supports the achievement of organizational objectives and improves strategic decision-making. The real “trick” behind creating value in a company is to allow the board and senior management to set the tone for an open, risk-aware culture throughout the organization.

This paper, published by the AICPA, notes that ERM is not intended to be a complex process of checklists and models, but rather an extension of existing risk management practices to provide more detailed information on risks to management to better weigh against rewards. Some key points to building a successful ERM system from experienced companies include:

Strong senior management support for ERM,
Simplicity at the outset,
Build on tools already in place, and

Plan for your ERM process to evolve over time.

This article emphasizes the point of keeping ERM simple at first, allowing it to mature over time. In many organizations the greatest value can be quickly achieved by starting with a simple conversation.

Click the link to read the article.

Citation: “Effective Enterprise Risk Management Starts with a Conversation” AICPA. Sept. 1, 2009.