Before organizations can begin implementing an enterprise risk management (ERM) program, they must get buy-in from leadership. But in order for leadership to feel comfortable buying into a program, they must have sufficient evidence that it will make a difference for the organization’s overall goals.
There’s a solution to this catch-22. By having the right conversations and showing results from smaller-scale initiatives, organizations can demonstrate the value of an ERM program to leadership—and do so without the same time, effort, and resources required for a full-scale ERM operation.
Start the old-fashioned way
The right technology can be instrumental in demonstrating ERM program successes. However, before using technology to prove the benefits of an ERM program, risk managers can begin influencing leadership through small, in-person conversations.
“One of the biggest buy-in methods for a successful strategy is talk,” writes Darius Delon, AVP of risk services for Mount Royal University, in the article Putting Strategy into Risk Management. “One person at a time, one hour at a time, one advocate at a time. People will not buy-in to ERM just because they read something you put in front of them or heard at a large forum. Talk to them, work with them, get small wins…”
These conversations will get the most traction if they center on the goals and KPIs crucial to leadership and the board. Donna Galer, writing for the Insurance Thought Leadership blog, says that, because the value of ERM programs is not easily quantified, “ERM requires an understanding of the company’s strategic goals and objectives to identify the risks that might derail their achievement.”
Positioning ERM as a positive (a means to achieving important company-wide strategies), versus a negative (what companies cannot do or should be wary of), also makes a big difference. Delon continues, “Change how [people] perceive managing risk, and help them make positive changes in how they manage their activities without the quintessential NO that is associated with risk management. ERM is just a tool for making better sustainable decisions for the organization.”
By leading conversations that revolve around leadership priorities, risk managers can lay the groundwork for future, more in-depth discussions around ERM.
Score quick wins
Because getting leadership buy-in can depend on showing concrete results, starting with a small project that stands in for the eventual larger program can be a useful approach to building support.
The article Looking to launch an ERM program? Borrow ideas from startups points to the MVP concept. “In startup lingo, the minimum viable product (MVP) is the most scaled-down version of a product that is still usable,” the article states. The MVP shows enough value to stakeholders that they’re willing to get on board without seeing the fully completely product or process. Furthermore, the MVP allows stakeholders to offer critical feedback that can inform the process before employees invest too much time and effort. Risk managers can implement an ERM program on a small scale and see quick results that make stakeholders see the vision for a truly enterprise-wide initiative.
“Applying this concept to version 1.0 of the ERM program can scale back the planning effort considerably,” the above article continues. “For example, instead of mapping out a program across the enterprise, the initial rollout may involve a single department.”
So what might one of these quick wins look like? The most impactful ones go beyond traditional ways of displaying risk, like the risk assessment or risk heat map, and reveal deeper insight into data—answering the questions “What does this tell me?” and “What can I do about it?” If an organization’s goal is to reduce annual spending, a risk management team might set up a small-scale ERM program for its own department and gather incident data and cost data for a particular quarter. Data analytics could then be used to provide meaning to the intersection of these data points. According to The data-driven risk manager, “Leading indicators, metrics that foretell potential risks or negative outcomes, tend to be the most actionable type of information. Rather than looking at the after effects of actions taken in the past, leading indicators predict events in the future.”
After setting up specific parameters, the risk management department can look for outlying data points (such as an increase in overall incidents or a certain kind of incident) and see if that correlates to an increase in cost. Making a connection like that represents a quick and tangible win that allows stakeholders to see real-world results on a more specific scale—and clearly envision how that could apply to the larger enterprise as you expand ERM in a controlled manner.
Say goodbye to spreadsheets
In order to really sell the ERM concept, risk managers need to move away from spreadsheets and toward technology that can efficiently and accurately gather data and analyze trends. The Business Insurance article Automation, new technology help streamline ERM programs states:
“Many risk managers starting an ERM program often use Microsoft Excel spreadsheets to collect and organize information, said New York-based Michael Liebowitz, the director of insurance and risk management for New York University, who uses such spreadsheets for certain tasks. ‘But Excel is not going to do the analytics. Excel is not going to provide any sort of relational database to run any sort of report,’ he said.”
An ERM platform like Origami Risk allows for more accurate and seamless data collection. Built-in automation of ERM technology delivers real-time communication, and data analytics functionality provides actionable insight that can’t be derived from spreadsheets alone.
Furthermore, because ERM thrives on the involvement of various departments and sources of data, a single consolidated repository proves crucial. “While Excel is OK for keeping track of risks in small, isolated projects, it’s not appropriate in an environment which needs risks to be input, updated and managed by multiple people,” states a Risk Decisions paper. “Also, it’s really hard to consolidate and aggregate risks held in different Excel sheets across a business, so it just doesn’t work from a portfolio perspective.”
Promoting ERM as an initiative free from administrative burdens will go a long way with stakeholders and colleagues alike.
Choose flexible, intuitive technology
To meet the right goals, technology must be flexible enough to work within your organization’s scale and scope. Implementation support and user adoption deserve special consideration, too. Otherwise, it could take many months to see even preliminary results of an ERM program—a length of time that already-busy employees don’t have and one that risks losing the attention of leadership.
The key lies in choosing ERM technology that:
- Is flexible enough to connect to your organization’s processes and objectives (not the other way around)
- Doesn’t require an overly lengthy implementation
- Has a short learning curve so you can hit the ground running and prove value
Furthermore, the right ERM technology should have the ability to tailor views of program data based on role, interest, or need. In demonstrating ERM’s value to stakeholders, risk managers will need the ability to filter and display the most crucial metrics. Origami Risk’s ERM solution, for example, allows users to view data through “lenses” based on interest. If, say, an organization’s most important goal is saving money, users can filter risk data that shows how a specific initiative prevented damage and saved money.
Look to Origami Risk for the whole package
Origami Risk’s ERM platform allows for a speedy onboarding process so you can begin getting buy-in from key stakeholders while your in-person discussions are still top of mind. Automation and data analytics functionality is intuitive and flexible, so you can start a mini ERM program that generates fast results and proves value. After you’ve successfully made the case for launching a full-scale ERM program, Origami Risk has the ability to scale with your growth. No matter the size of your organization or its goals, you’ll have the tools on hand that lead to deep insight and actionable next steps.
Learn more about how Origami Risk can support your ERM program by getting in touch with one of our experts today.