Getting the Most Out of ERM

The Committee of Sponsoring Organizations of the Treadway Commission, or more commonly known as COSO, released a report this month on how companies can derive the most benefit from their Enterprise Risk Management (ERM) programs.  Authored by two professors and risk practitioners from DePaul University, the report provides approaches and action steps for companies to follow as they embark on their ERM journey.  Here is a summary list of key activities to bolster the ongoing implementation of an effective ERM program.

1. A program of continuing ERM education for directors and executives


2. ERM education and training for business-unit management


3. Policies and action plans to embed ERM processes into the organization’s functional units such as procurement, IT,or supply chain units


4. Continuing communications across the organization on risk and risk management processes and expectations


5. Development and communication of a risk management philosophy for the organization


6. Identification of targeted benefits to be achieved by the next step of ERM deployment


7. Development of board and corporate policies and practices for ERM


8. Further discussion and articulation of a risk appetite for the organization and /or significant business units, including quantification


9. Establishment of clear linkage between strategic planning and risk management


10. Integration of risk management processes into an organization’s annual planning and budgeting processes


11. Expansion of the risk assessment process to include assessments of both inherent and residual levels of risk


12. Exploration of  the need for a dedicated Chief Risk Officer or ERM functional unit

Wheelhouse Advisors is fully equipped to help companies with activities such as these.  For more information, please visit www.WheelhouseAdvisors.com.

Implementing ERM: What Boards Must Consider

The Committee of Sponsoring Organizations of the Treadway Commission ("COSO") recently released a white paper discussing the role of the Board of Directors in an effective Enterprise Risk Management ("ERM") program.  It provides an overview of the key drivers for implementing ERM today and what Boards must consider during the implementation.  Here is what they suggest.

In the aftermath of the financial crisis, executives and their boards realize that ad hoc risk management is no longer tolerable and that current processes may be inadequate in today’s rapidly evolving business world. Boards, along with other parties, are under increased focus due to the widely-held perception that organizations encountered risks during the crisis for which they were not adequately prepared. Increasingly, boards and management teams are embracing the concept of enterprise risk management (ERM) to better connect their risk oversight with the creation and protection of stakeholder value.

While ERM is not a panacea for all the turmoil experienced in the markets in recent years, robust engagement by the board in enterprise risk oversight strengthens an organization’s resilience to significant risk exposures. ERM can help provide a path of greater awareness of the risks the organization faces and their inter-related nature, more proactive management of those risks, and more transparent decision making around risk/reward trade-offs, which can contribute toward greater likelihood of the achievement of objectives.

If your company is considering implementation of an ERM program or simply looking to enhance your current ERM program, Wheelhouse Advisors can help.  To learn more, visit www.WheelhouseAdvisors.com.