Enterprise Risk Management Framework

Enterprise Risk Management (ERM) is a cohesive integrated approach to assessing, mitigating and managing risk across an organisation in line with its strategic goals. Adopting an integrated methodology protects your business from threats whilst enabling you to hit your targets.

 

Within an enterprise risk management framework, your organisation must be able to articulate:

  • What are all the potential risks that might threaten your business?

  • What is your attitude to risk – how much risk are you willing to take?

  • How do you evaluate the impact of risks?

  • What are your policies and governance procedures for managing risk?

  • What data do you need to manage risks and how will you capture, store and report it?

  • What are your risk control processes?

  • How do you respond to risks?

  • What possible scenarios could create even greater threats – how might different risks interact to cause bigger problems?

Benefits of Enterprise Risk Management

The benefits from a cohesive approach for your organisation are better awareness and understanding of the risks faced, improved ability to respond quickly and efficiently, greater regulatory compliance, reduction in operational costs and improved confidence in the ability to meet strategic objectives.  All of these contribute to better business decision making.

 

Benefits may be offset somewhat by challenges in implementing fit-for-purpose enterprise risk management solutions though. Businesses can run into the difficulties and that’s when you can benefit from our expert consultancy and extensive experience.

 

Example of Challenges with Enterprise Risk Management

  • Inconsistent use of common risk language

  • Lack of corporate-wide acceptance of the benefits reducing adherence to policies and procedures

  • Unclear ownership of specific risks or policies

  • Risk de-prioritising relevant business issues and their mitigation

  • Inconsistent approach to risk reporting

  • Issues with data reliability or technology

  • Slow or inadequate implementation of risk management policies

Implementing ERM is far from easy – high level agreement and strong leadership is vital.

Crescendo have vast experience in all areas of enterprise risk management framework and governance framework design, development, review and enhancement. This includes, but is not limited to:

  • risk reviews

  • risk policies (insurance and asset management)

  • risk universe and appetite

  • risk governance

  • Three Lines of Defence governance model

  • oversight of outsourcing

  • operational risk KRI reporting

Crescendo has been involved in two significant enterprise risk management transformation projects for 12 and 18 months’ duration respectively.

Other recent projects have included:

  • review of the readiness of an insurer’s internal audit function to meet Solvency II regulatory requirements (at the request of the PRA)

  • work on a Section 166 review focusing on governance and risk management; and

  • gap analysis of conduct risk requirements at a medium-size insurer (at the request of the FCA)

  • review of insurers’ risk policies to ensure an appropriate Board-approved control environment, in line with business and regulatory expectations (mini case study)

Check out our thought leadership on a number of Enterprise Risk Management topics here

Regular reviews of the Risk Management Frameworks

Most frameworks envisage an external review of the framework taking place every few years.  Your business may be about undergo this exercise. 

The perspective adopted for this review is crucial to ensure the company obtains value for money and value-added insights.   It should include an adequate dialogue with key stakeholders in the business and the Board to understand what has worked well and what are the key improvements areas.

Bring in Crescendo Advisors on your next enterprise risk management framework review for a comprehensive, pain-free experience.

Speak to us today on +(44) 7766 725315 or email isaac.alfon@crescendo-erm.com

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