Ian Ascher Discusses the Importance of Enterprise Risk Management (ERM)
Enterprise Risk Management, or ERM, involves identifying, assessing and preparing for risks that may interfere with an organization’s overall objectives. ERM has become increasingly important in recent years as a way to manage risk and support business opportunities. In previous decades, risk management was done primarily through the purchase of insurance to protect against specific types of losses — fire, theft, malpractice or liability risks, to name a few. An ERM focus is established to identify and strategically manage material risks across the enterprise to be within a defined and acceptable risk appetite. ERM sets to establish oversight, control and discipline to enhance enterprise value.
Managing Director of Global Risk Management, Ian Ascher relies on a combination of traditional insurance products, subject matter experts, and ERM leaders to gain a total picture view on risk management. Some risks are not easy to assess or manage and involve legal, operational, commercial and employee related issues that are not predictable. Ian Ascher explains that ERM is industry-specific, and involves both reactive and proactive mechanisms for mitigating and influencing the impact of risk to an organization. This platform typically involves a top down approach to facilitate risk identification, appetite, control and monitoring — ultimately resulting in progress against the defined goal.
ERM can help companies avoid unexpected disasters, ensuring the company has a plan in place to address risks as they evolve. This actively managed platform positions the business to maintain a competitive advantage regardless of the circumstances it may face. ERM also involves determining what will improve the company’s reputation, such as widespread measures to become more sustainable in today’s environmentally conscious era.
The more risk adverse a company is, the more attractive it is to investors. Knowing the risk profile of each company can help investors make informed decisions that allow them to invest with confidence. Investors want to have information about a corporation’s risk management profile and ERM procedures, and it is expected that investors will increase this demand in the future.
Enterprise Risk Management is a constantly evolving and ongoing process, with no end date. When properly implemented, Ian Ascher states it can help corporations achieve consistent business objectives regardless of both expected and unexpected fluctuations in the market, within the organization, or among consumers and clients. It helps corporations stay ahead of changes and to be among the first to react to these fluctuations in a strategic manner.
The success of Enterprise Risk Management guides the health of the overall business structure. If risks are not identified, Ian Ascher says they cannot be mitigated, which leaves a business open to constant risks and depressed opportunities to adapt to shifting circumstances. ERM also allows companies to standardize processes, tools and methodologies to monitor project or growth risks, which allows them to address challenges appropriately when they arise. To be adequately prepared, corporations need to identify enterprise wide risks, and create strategic actions plans that align with the corporation’s resources to reduce them.
Overall, Enterprise Risk Management is critical to the long-term viability of a corporation. Firms should use an ERM framework that works for their business to constantly identify, monitor, evaluate and mitigate risks in today’s changing business environment.
