I do want to confess that I am a heretic.

That is because I do not believe that there is one single best ERM approach.

And I do not believe that a scientific, advanced, disciplined adherence to any single ERM system will produce best or even good results.

In fact, I think that a scientific, advanced, disciplined adherence to a single ERM system is also dangerous as a career strategy and as a strategy for the profession of risk managers.

The details of this heresy have been put forward here at Riskviews in over 20 postings and in a number of published articles and presentations that have been mentioned on the Plural Rationalities page of this blog.

One of the key underpinnings of these ideas is that our businesses will operate under  one of four different risk perspectives.  The conclusion about risk management from these ideas is that two things are needed to have a successful risk management program:

  1. At the heart of the risk management program must be a set of practices and processes and systems that are supportive of the predominant risk perspective of the firm.
  2. Some capability to see the other risk perspectives and to be able to adapt the risk management program of the firm as the predominant risk perspective of the firm changes.  None of the four risk perspectives or the risk management programs that are consistent with those perspectives will work all of the time.

Some of the most advanced firms in the risk management area will say that they are operating under all four styles of risk management all of the time and are prepared to shift emphasis at any time to the aspect of risk management that is the most effective.

That style of risk management has been titled Rational Adaptability.

The four styles of risk management are called:

Explore posts in the same categories: Cultural Theory of Risk, Risk Management System


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One Comment on “Heresy”

  1. Max Rudolph Says:

    Dave’s heresy is well founded. An organization, in my opinion, should seek out varying opinions about the risks it takes. It should vary its outside risk consultants on a regular basis so you get new perspectives to combine with internal expert opinion.

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