Why Some Companies Fail at Implementing ERM
Often after a failure, loss, blunder, or catastrophe, teams discover that the cause of that failure was a series of simple misunderstandings or small oversights.
Despite the seeming insignificance of these small errors, a company can experience significant financial losses and potentially irreparable reputational harm as a result. But they don’t have to.
As a company grows, it encounters more risk. It’s essential for growing companies to implement an enterprise risk management (ERM) program. But why do some ERM programs succeed while others fail?
What does a successful ERM program look like?
Implementing a comprehensive ERM program requires you to utilize risk management best practices, coordination, and oversight throughout the organization. Leadership needs to support risk managers, and risk managers need to have the right tools and resources. Business unit managers must understand their responsibility as a risk owner.
A successful ERM program also requires effective strategies and tactics that result in actionable data. Risk managers who demonstrate ROI with documented risk avoidance and cost savings can deliver value for their company. They also gain company-wide support for the ERM initiative.
Reasons for failure
The implementation of an effective ERM program is no easy task. Risk management can’t stand alone. It must be embedded in all policy and business processes and be paired with a culture of diligence and accountability. If not, ERM becomes an isolated task or can get stuck as just a collection of documents.
But why is implementing and maintaining a successful ERM program so difficult? Many companies fail due to:
- Lack of focus
- Apathetic leadership
- Lack of investment
- Poor communication
- Risk experts not sharing their knowledge
- Slow implementation
- A rapid pace of change
- No planning for unpreventable events
Success with ERM
ERM solutions are enabling organizations to manage risk more efficiently. Organizations utilizing sophisticated software solutions have documented noticeable improvements in the quality of their risk management programs. In addition, users bring cost savings to their organizations through automated processes, increased speed, improved accuracy, and enhanced collaboration.
Achieving a comprehensive ERM program can involve the coordination of many moving parts. An ERM solution can bring all the pieces together — creating a unified ERM approach.
An ERM solution with easy functionality and robust capabilities can help you avoid the traps that so often lead to a failed implementation. Instead, you’ll be able to optimize your ERM program by simplifying and integrating it to deliver real ROI for your organization.
Read more in our white paper about the reasons ERM implementations fail and how you can avoid those pitfalls to optimize your ERM program.