The ERM Initiative at North Carolina State University’s Poole College of Management has published its 12th annual report on the state of ERM practices. Each year, I have reviewed their report.
I bring it to your attention because it is an important topic and their report usually has some useful data on the level of maturity and effectiveness of risk management practices.
It has consistently confirmed, each year, that traditional risk management practices are not seen as adding value to an organization’s success. It may possibly help them avoid some degree of harm, but it will not add much to the chances of success.
As you will see later, more than half of the larger companies, those with revenues of $1bn or more, believe they have ‘complete’ risk management processes. But only 3% of the CFO respondents say that ERM is giving them much strategic value.
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Let’s stop the madness. Continuing what hasn’t worked in the past, traditional risk management based on a periodic review of a list of risks, is not the way to succeed.
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Change to enabling informed and intelligent decision-making and reaching an acceptable level of certainty that you will achieve enterprise objectives. This requires considering all the things that might happen, both good and bad. Focusing only on avoiding failure will result in…
