Linking Strategy and ERM – The Final Frontier
Many organizations have use the concepts and practices of Enterprise Risk Management to improve the control of their major risks. If applied properly, ERM will improve the transparency and discipline of risk management. With a risk management regime that is transparent and disciplined, management should begin to notice whether it is aligned with company objectives…whether it is linked with strategy. When linked with strategy, ERM can act like the crew on a catamaran who lean against the tilt of the boat in heavy wind. Or to use another nautical analogy, can be the keel of the boat that helps to keep it upright. The aligned ERM program will not be heavy cargo stacked on the deck, nor will it act like the passengers who run to the low side of the boat.
And better still, ERM can help the boat to get where it is going by helping to choose a path between or around the rocks. But insurer strategies vary widely, so it seems logical that the linkage of ERM with strategy will vary. And that may be the reason that there is so much difficulty with the process of aligning strategy and ERM. Too much advice that focuses on just one way to accomplish that – one way that will work best with just one of the dozens of existing insurer strategies.
4 steps to linking strategy and ERM continues this discussion on the Willis Towers Watson blog.