How to Reinvent Your Company Through Better Enterprise Risk Management

A recent article by Jack Bergstrand and John Wheeler in Directors & Boards Magazine discusses how companies can reinvent themselves through better enterprise risk management ("ERM").  The article provides a unique perspective by integrating the management principles of Peter Drucker with ERM.

Enterprise risk management is an important tool for sustainable competitive advantage. Like the market and the enterprise itself, successful enterprise risk management programs require holistic and systematic processes supported by the following factors:

1. Envision: Strategy linked to customer needs, with defined operational implications, and well-articulated enterprise guidelines for managing risks and opportunities.


2. Design: Formal risk mitigation and opportunity sensitivity analysis/monitoring/reporting.


3. Build: Enterprise-wide controls, processes and infrastructure.


4. Operate: Well-established personal roles and motivations for people to act in the best interests of their companies through proper incentives.

For companies to reinvent themselves, they can’t be viewed as the sum of their parts. The enterprise overall is the goose that lays the golden eggs. Similar to a brand, it needs to be holistic, integrated and relevant—and continuously adapt through successful and accelerated enterprise projects.

Jack and John provide greater insight on these concepts in an on-demand webcast hosted by Directors & Boards Magazine.  The webcast includes a lively question and answer session addressing concerns from the audience of board members and senior executives.  To access this free webcast, visit www.WheelhouseAdvisors.com.

The Spread of Risk Management Functionitis

While many in corporate America are working to reduce the impact of the H1N1 virus on their workforce, another virus has been infecting corporations for years.  As Jack Bergstrand, Founder of Brand Velocity, Inc., explains in his recent highly regarded book, Reinvent Your Enterprise, corporations of all sizes have been suffering from what he calls "functionitis".  Mr. Bergstrand examines how this virus has spread as more companies employ knowledge workers rather than manual workers. Knowledge workers typically organize into specialty areas within corporations based on their subject matter expertise.  This, in turn, can lead to a very bad case of "functionitis".  Here is Mr. Bergstrand's explanation of the virus and its possible cure.

"Functionitis" is a term for when functions become separated from the Enterprises they are supposed to support.  Functionitis is also an Enterprise example of where bad systems create bad behaviors.  It sometimes generates outright conflict.  More often, it generates less visible cross-functional productivity breakdowns driven by incompatible priorities and preferences.  A clear sign that functionitis has taken over is when one function considers itself an internal customer for another function.  With knowledge work, reducing moving parts at the top can systematically resolve many of the functionitis issues in and of itself.  It can also systematically improve the allocation of resources and accelerate Enterprise reinvention in rapidly changing markets.

Functionitis is at the core of the need for Enterprise Risk Management programs.  Not only does it impact the productivity of risk professionals across an enterprise, but also the ability for an enterprise to understand its true risk profile.  Is your company suffering from risk management functionitis and looking for a cure?  If so, Wheelhouse Advisors can help.  Visit www.WheelhouseAdvisors.com to learn more.