The Importance of Control Activities for Your ERM
Risk management protocols are proof of a company’s current operational status and its commitment to effective risk management and compliance. Consequently, regulators and stakeholders are increasing their scrutiny of these protocols. How can you sustain the life of your organization under such pressure?
There’s a common perception that these protocols — policies, procedures, and processes — are only static reference materials. This underestimates the importance of enterprise risk management (ERM) for organizational health. Because these protocols actually ensure that an organization’s risk responses are carried out.
Understanding the nuances
Policies contain high-level principles or requirements. They are formally agreed upon by management and dictate direction for individual departments.
Procedures are affiliated with specific policies and describe how policies are to be executed on a day-to-day basis. This ensures alignment with regulatory requirements and strategic goals, like minimizing risk. Procedures also define processes; though a single process may consist of several procedures. These include daily, weekly, or quarterly management functions and job activities across the organization.
Processes are the activities and functions that take an input, or multiple inputs, and generate an output. They are the narrative of how things get done in a company. Processes can be large or small, and may span multiple departments and groups.
Processes are often placed in categories like operational processes, management processes, IT processes, administrative processes, and so on. It’s the responsibility of everyone within their work activity to maintain these processes.
Organizations need to understand the overall level of risk embedded within any of these processes if they want to ensure the health of their business.
ERM provides clarity
Organizations seeking ERM controls that effectively mitigate risk must, must, must also ensure the proper protocols are in place. Are risk management practices followed enterprise-wide? Are policies, procedures, and processes understood and used in daily operations?
The best way to measure control activities and keep them consistent is with an effective ERM software solution. A user-friendly, next-generation ERM solution will feature configurable enterprise risk templates that simplify risk assessments for processes, procedures, and policies.
Flexible evaluation frameworks supported by the solution allow you to assess the organization from any perspective. They evaluate the risk created by your organization’s processes, how well the controls that are built into policies and procedures are mitigating those risks, and provide simple, understandable residual risk scores. An intuitive scoring methodology can then make it easy to identify problem areas, isolate weaknesses, and prioritize issues.
An ERM software solution can also manage all aspects of enterprise risk. This includes policies, procedures, and enterprise documentation to meet your regulatory, legal, and compliance requirements. Policies and controls can be linked to federal and state laws, guidelines, and compliance requirements.
Sophisticated simplicity is what you want
If your ERM software offers a simple and intuitive design and functionality, but also the sophistication and integrated capabilities a risk manager needs, you can easily survey your entire risk landscape across departments and process boundaries. This way, you’re able to create and manage a risk management structure that keeps your business on track via real-time monitoring that allows you to be proactive, not reactive.
The net-net? An established and carefully-defined ERM software offering that allows you to create tailored frameworks and controls to suit your exact requirements can make ERM easy. So search out an ERM solution that quickly and easily lets you build multiple frameworks to monitor different aspects of your enterprise.
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