Developing an ERM plan

Management perspective:

• From a management perspective, decide which key policies and procedures one should consider as the starting point when developing an ERM plan for an organization. Defend your position.
  Provide a list of essential personnel whom you believe should be involved in creating and maintaining an ERM plan for an organization. 

Recent economic crisis showed us example, how big firms were not prepared to deal with risks or lack risk management capability. At the peak of crisis, companies cancel their products, postpone new launches and fight for survival. Here in this paper, I am going to discuss policies and steps from the management perspective, which should be considered to have optimum level risk management.

In general, under law jurisdictions corporate directors are responsible for success or failure of ERM program. So from the beginning managements should keep close eyes on approving the policies and defining steps of ERM. Key policy and procedure at the starting of developing ERM will be:

The governance by the team or board committee will assist both employee and client functions. It will also ensure all the risks are closely monitored and effective measures are taken to mitigate the future losses.

• Governance through Management board or Board committee (Risk Committee)
  1. Recognize key driver of risk management & Risk appetite.

The key driver for the success is efficient funding of risk management plan. This will allow structured approach to the ERM program. Risk appetite will help in predicting company’s ability to withstand risks. The step should be performed in the beginning so that funding and withstanding capability can be synchronized for the further designing of steps.

In my views, Corporate Directors, internal auditors and Chief Risk Officer (CRO) should be involved in creating and managing ERM program efficiently.

A. Brodeur, K. B, M. P, N. P .(2010, February). McKinsey Working Papers on Risk. A Board Perspective on ERM, (18), 1-3.

• Describe the role of each person. Suggest a timeline for establishing an ERM plan, giving your opinion on how frequently the plan should be reviewed. 
  1. Roles of:
  2. Corporate Director: They are responsible for the reviewing and approving every phase of risk management. All the stats and financial analysis should be transparent and well evaluated by Directors again.
• Internal auditors: They help in revising plan according to Internal Audit professional standards, so that functions do not take any direct responsibility of risk management decisions.
• Chief Risk Officer: He is the in charge of ERM and reports directly to CEO of the organization. As an in charge he plays role in improving tools, analysis, planning, strategy development, etc.
• ERM plan should be revised and reviewed in every financial year, before and after a merger or acquisition, when new product is launched.
• Reference

Omers. ERM Policy, Retrieved from: https://www.omers.com/pdf/Enterprise_Risk_Management_Policy.pdf