Building Value While Managing Risk
For years, business leaders have viewed risk management as a complicated, spreadsheet-centric compliance process that doesn’t help their organizations get ahead. Anytime anyone brought up the word ‘risk management,’ it conjured thoughts of invasive compliance audits that burned overhead time and money, and distracted the organization from its strategy.
ERM: The New Reality
However, industry leaders and top-tier consulting firms have begun to acknowledge the value of Enterprise Risk Management (ERM). In a recent report published by Ernst & Young, the data revealed a positive relationship between risk management maturity and financial performance.
“Companies in the top 20% of risk maturity generated three times the level of EBITDA as those in the bottom 20%.”
Ernst & Young
Turning Risk into Results, March 2012
An effective ERM program helps drives informed decision-making for better performance and greater rewards. As a critical business system, Enterprise Risk Management transforms your organization and empowers you to tackle your risk potential head-on – proactively identifying, understanding and managing your risk to position your organization for sustainable, long-term growth.
A successful enterprise risk management program will:
- Provide the foundation for all risk data across your organization
- Deliver visibility to all risk data
- Improve accountability and control
- Support compliance, new regulations and frameworks
ERM is Not GRC
Different from Governance, Risk & Compliance (GRC), ERM is a driver of strategic value, competitive advantage, and business growth. Unfortunately, due to the corporate and accounting scandals of the late 1990s, “risk management” has become synonymous with Sarbanes-Oxley, which had the unintended consequence of adding tremendous complexity. To help organizations deal with this complexity, an entire industry of GRC vendors entered the market to exclusively focus on monitoring compliance, which by itself is not risk management.