An unprecedented epidemic has occurred with COVID-19. It has uprooted many businesses and stimulated a new way of thinking about safety. In the current environment, you must take all measures possible to ensure that your organization does not only weather risks but emerges stronger on the other side. Many companies do not understand the true potential of an enterprise risk management (ERM) service and the benefits of implying ERM methodologies. This article at Gartner by Rob van der Meulen talks about how ERM implementation can improve your business efficiency, productivity, and bottom line.
Companies around the world responded to the pandemic crisis differently. While some companies chose remote work after a few positive cases, others decided to wait. These disparities were rooted in methods and processes adapted to secure goals and earnings.
Three ERM Practices to Strengthen Your Business
- Implement effective agile approaches to craft efficient escalation workflow.
- Appoint a leader that can monitor these risks and provide guidance to escalate risk information to the crisis management team.
Since traditional methods have a high escalation threshold making the model futile in today’s work environment. Companies should now be dynamic and rigorous at drawing up effective measures to mitigate risks.
Revaluate Risk Profile
Business executives must evaluate and define enterprise risk profiles to effectively implement the ERM. This ensures risk ownership at the highest level of decision-making. The ERM procedures will chart a clear roadmap for leaders in case of any roadblocks. A timely response goes a long way with stakeholders. Thus by integrating ERM with the corporate strategy, management can better understand the risks associated with opportunities and ways to manage them.
An agile ERM function allows organizations to take the right risks to flourish. Gartner’s review of 388 organizations’ strategic initiatives in 2019 revealed significant opportunity costs associated with failure to mitigate risks in time. On average, strategic initiatives were delayed 1.26 months in a year due to untimely risk management. Additionally, for a $5B market-cap company, the opportunity cost amounts to $99 million. Whereas timely risk management is twice as likely to be 5% or more under budget.
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