Evidence is mounting that it is no longer an option to ignore investments in this important organizational capability. Companies need a rigorous enterprise risk management framework to effectively compete in today's uncertain environment. To help companies understand why they need ERM, here's an excerpt from my take on how enterprise risk management enables the business to move faster and overcome disruption:
The wider adoption of strategic risk management cannot come fast enough to save everyone. But for many leading companies, it is increasingly clear to senior executives and board directors that enterprise risk management is not an inhibitor of business performance, as it was often viewed in the past, but is actually a powerful enabler of market success.
That shift in thinking is borne out by a wide range of academic and market research...
Here's an operational risk example from The Impact of Catastrophes on Shareholder Value:
The authors found that, in the wake of a catastrophic event (such as a natural disaster or major data breach),companies with more robust business continuity and resilience plans were punished less by shareholders.
Specifically, those organizations suffered lower market capitalization decreases – 5% or less – and enjoyed quicker returns to pre-crisis levels, with an average +5% impact on shareholder value by the fiftieth day post-catastrophe...
So what is the bottom line for risk professionals and the business leaders they advise?
[ERM] has turned into a capability that very much impacts the bottom line. An effective, reliable and relied-on ERM capability is a competitive difference-maker that you don’t want to be without during these increasingly uncertain times.
Check out the complete article on Infinitive.com for my full perspective.
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