Fundamentals of Risk Management: Understanding, Evaluating and Implementing Effective Risk Management by Paul Hopkin

Author:Paul Hopkin [Hopkin, Paul]
Language: eng
Format: epub, azw3, pdf
Publisher: Kogan Page
Published: 2014-10-02T21:00:00+00:00

Successful implementation of ERM

Risk managers have the responsibility of selling the value added by risk management to the organization and its stakeholders, but this is not an easy task. How do risk managers sell the value they are generating when that value may only be realized when unforeseen events occur, or if the new control systems are successful, when the risk never occurs?

Risk managers need to remember that the actual implementation of an ERM program generates value in itself. Often risk managers are so focused on successfully managing the program that they do not have the time to clearly communicate this value to the organization. The greatest value coming from the development of a corporate risk management program into an ERM system is the development of physical, financial and cultural resilience in the overall business, while still focusing on achieving overall business objectives.

Risk managers can be their own worst enemies as one of the key elements of a successful practitioner is a passion to successfully tailor, implement and maintain an ERM program. Correspondingly, this passion is a weakness as the practitioner needs to remember that others do not always share that passion.

One of the major challenges ERM programs face is the development of an ‘ivory tower’ mentality. In this scenario, all risk knowledge and activities are based in one department. Risk managers need to devise a system that encourages the migration of risk management methodologies and tools out into the organization. There is also a balancing act required. Practitioners must not force the use of risk management processes on operational areas where there is little value. It is critical to the success of an ERM program that it has a system that is flexible enough to work with the organization to capture and manage the critical risks successfully without adding unnecessary work on managing lower level risks.

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