As a senior leader or Board member, you may be very familiar with Enterprise Management (ERM). Indeed you may have undergone a lengthy exercise in developing an ERM framework for your organization – identifying risks, considering the potential impacts, evaluating the probability of occurrence, preparing or reviewing red/yellow/green heat maps that illustrate the relative seriousness of risks and developing action plans to bring risks to a tolerable level. The initial ERM exercise and ongoing reporting and monitoring of risks are a huge investment of time and possibly financial resources too, especially if external consultants are engaged to guide the process.
Sound familiar? If so, congratulations on this important first step. Now the bad news – you’re not done. You have performed a risk assessment at a point in time for the organization in its current configuration. What about major new programs and initiatives? A new program, a new line of business, a new technology? Do you have a robust process to evaluate the risk associated with each initiative before the organization launches or otherwise commits to undertake it?
And what about the impact of the new initiative on the risk profile of the organization as a whole? Let’s say you already have some cautionary “yellows” in your enterprise risk assessment and you are about to launch a major new project. Has your senior management team had the opportunity to dialogue on whether the new initiative will put the organization “over the edge” into the high risk category? Or worse, has the new initiative introduced an element of risk that was otherwise absent or very low and therefore currently below management’s radar? For example, a new undertaking with a previously untested third-party partner?
Too often in my consulting practice, I see organizations approaching ERM as an exercise separate and distinct from the business-casing and other management disciplines they use for evaluating new initiatives. In my experience, it’s the hidden risks associated with new initiatives that worm their way unexpectedly into the organization creating all number of problems. Such problems are the costly to deal with, harmful to the organization’s reputation and/or result in the failure of the initiative itself.
It’s time to take ERM to the next level by integrating it with a robust evaluation process around new initiatives. Better to assess the risk upfront, have an open dialogue amongst the senior management team members and put the right risk mitigation strategies in place to ensure success of the initiative while containing risks to an acceptable level. And it’s also a good way to engage the Board and leverage their wisdom and experience on major new undertakings. To get you started, here’s a simple but effective New Initiative Risk Assessment Tool.
Are you spending much needed time and money fire-fighting the hidden problems that emerge day to day within your organization? Worried about what may be lurking below the surface with new initiatives you have launched or are about to embark on? StraightUp Management Solutions can help you with practical risk management solutions. Contact us at email@example.com or 905-466-7688 for a free consultation.