Page 19 - Life Insurance Today June 2015 SAMPLE

in practice when implementing ERM in the last - and
longest - section.
4. Finally let us consider the eight
common pitfalls of enterprise risk
management implementation common
to all organizations:
Enterprise risk management (ERM), which is an integrated
approach to risk management, is being increasingly popular
in the world. Bill Fuller, a general manager at Hudson in
the United States, worked in multinational conglomerates
and spent time in professional services with
PricewaterhouseCoopers completing compliance audits and
offering technical expertise.
He recently presented in Denver on the common pitfalls of
ERM implementation. These are Fuller's eight common
pitfalls of ERM for organizations considering implementing
ERM or that have stalled ERM initiatives:
1. Management must accept and choose a risk
management framework like The Committee of
Sponsoring Organizations of the Tread way Commission
(COSO). COSO helped to build a risk management
framework for organizations after high- profile business
failures like Enron drove calls for increased risk
management governance. Using a framework like
COSO's ERM framework is, "The start of a
communication tool using common language
throughout the organization," Fuller said and
important to ERM success in any organization.
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2. Lack of senior management commitment. "Any
initiative will fail if senior management is not
committed," Fuller said. Personally, I don't know any
risk management professionals who would disagree
with this statement.
3. No designated risk management and change-process
owners at the senior level or in each business unit.
According to Fuller, "There needs to be ownership
within the organization at senior- level management
with clearly defined roles and responsibilities."
4. Organizations must have a plan to move from the
current state to the desired state. "With that plan,
there must be tasks, roles, resources and time lines.
It's not just a plan that says, 'Yes, we're going to do
this,' but steps must be clearly outlined with a way to
monitor progress," according to Fuller.
5. Fuller believes that measurement tools will facilitate
the alignment of activities to the overall business
objectives. Then, match resource allocations (capital,
operating expenses, people) to those objectives. "Put
your dollars where they should be placed based on the
risks," Fuller said.
6. An organization should formally roll out a
communication plan and training curriculum to develop
risk management awareness and core competencies
in the company. Training to those core competencies
is needed, as well.
7. When a risk management program is in place, reinforce
its use by aligning human resource mechanisms to that
program. Fuller recommends incentivizing employee
participation. Begin the process with qualitative
measurements like meeting attendance, Fuller
recommends, then add quantitative measures later.
8. Organizations must develop an ongoing monitoring
mechanism to ensure the risk management mandate
is implemented. "Every time you identify risks, the
organization must develop a strategy to mitigate those
risks. These are nothing more than action plans.
Someone has to monitor the action plans and report
to management and company governance. This is
typically may be implemented by the internal audit
teams."
References:
Different contemporary discussions & information as
collected & collated from various text materials - available
both in hard & soft form.
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