Growing your business? Your ERM strategy needs to grow with it 

Gero Renker at Program Framework discusses why implementing an ERM strategy is essential as businesses grow and how it will give businesses a competitive, long-term advantage

 

Business growth is inextricably linked to increased risk. As the number of employees, services and relationships with external parties rises and diversifies, so too does the complexity and quantity of risks which businesses have to contend with.

 

Coupled with the many external risk trends businesses are currently facing - such as climate change, cyber-security threats and the accelerated pace of technological change - the challenges associated with growth can only be effectively addressed through the implementation of a data-driven enterprise risk management (ERM) strategy.

 

As this strategy evolves to keep in step with growth, its success is dependent on its integration into day-to-day processes, the appropriate application of digital tools and a focus on driving a risk aware culture across the entire business. 

 

Embedding the right approach for ERM evolution  

For smaller businesses, risk management tends to focus on immediate operational risks. These may include managing cash flows or dealing with market competition and supplier reliability. As such, procedures like risk assessments are less formalised.

 

As the business grows, the range of risks broadens with issues such as market volatility, talent retention and regulatory compliance becoming increasingly important. In response to these, the business often invests in more comprehensive insurance and compliance efforts. For national or global businesses, the risks become greater still, with geopolitical disruptions and sprawling supply chains posing a threat to objectives and profits.

 

To cope with the heightened risks, larger businesses will appoint a specialised risk management team and implement a formalised framework to ensure that policies are adhered to.  

 

All too often, the above evolution describes an ideal that is not reflected by the reality of a growing business. ERM processes and tools are often embedded in a reactive fashion rather than being the product of a planned approach. Yet adopting a deliberate ERM strategy early on will help to make it an integrated aspect of growth, an inherent set of procedures that becomes second nature as the business faces greater challenges in its expansion.  

 

Digitally transforming risk management 

An important enabler for successful ERM is the right digital toolset. Typically, businesses will use spreadsheet-based risk registers or specialist risk management solutions that are often complex or poorly adopted.

 

In both cases, risk information is often maintained and viewed by a small subset of stakeholders, rather than being shared with and contributed to by risk owners and team members across the organisation. 

 

By applying commonly available, modern cloud-based platforms and productivity tools, an organisation can streamline ERM processes, enhance collaboration, ensure data security and compliance, and ultimately make more informed decisions when it comes to managing risks effectively. Such a versatile and integrated ecosystem aligns well with modern ERM practices and can be implemented early to help risk management evolve with the support of a digital platform.  

 

This can be the foundation for analysing and sharing risk data, the ‘one source of truth’ that provides accurate and up-to-date information for every employee in the business. It can also unlock capabilities for risk-related task management, workflow automation for approvals and alerts and document management. Such a digital platform also facilitates the application of artificial intelligence (AI) features that promise to deliver new levels of productivity and insights for data-driven ERM. 

 

Creating a culture of risk 

Onboarding the right digital tools is a significant opportunity for growing businesses to form a culture that embraces risk management. Business culture is naturally more malleable in the early stages of growth making the early implementation of the data-driven ERM strategy with appropriate tooling key.

 

As the business grows, the collaborative capabilities of the cloud platform will ensure risk management processes are far easier for employees to understand and undertake. It is about empowering individuals across the board to readily engage with the ERM strategy, rather than leaving risk management to a select few.  

 

Investing in digital tools alone will not create a culture of risk though. Businesses must provide training to promote user adoption of the cloud platform or risk tool and educate the workforce on the importance of managing risk.

 

Risk management should be a facet of every job description and its significance should be reinforced to employees through written, formalised policies or regulations.  

 

Risks across the business are often interrelated and thereby require an interrelated approach to address them.

 

With so many influences at play, high quality data is fundamental to a successful ERM strategy. Transparency and shared ownership of risk will help to cement a culture that will enable businesses to prepare for the unexpected and ensure risk management is on the right footing as the organisation matures.

 

For businesses who invest in their ERM strategy early on, supporting growth objectives, reducing unexpected setbacks and attracting investors will be all the more achievable. 

 

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Gero Renker is a director of Program Framework, a consultancy that specialises in solutions for enterprise project, portfolio and risk management. 

 

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