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Resources for ERM Stakeholder Engagement

By Kailan Shang

Risk Management, June 2021

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Enterprise risk management (ERM) has grown fast in the 21st century due to a variety of extreme yet unfortunate risk events and regulatory changes. However, challenges continue with many other initiatives competing with ERM for resources within an organization. In this month’s newsletter, we revisit this old yet still important topic. In addition to the article “The Evolution of Risk Management: Taking the Next Step Toward Becoming the Coveted Business Partner” by Silitch and Runchey, we would like to bring a few other reports to your attention.

Securing Executive Buy-in for Preventative Risk Management—Lessons from Water Safety Plans

Summerill, et al. (2011) used a cash study approach to explore organizational culture and examine the process of managerial commitment to identify importance factors and provide guidance to those seeking to generate buy-in for preventative risk management. While the case studies are performed for water safety plans, the conclusions are applicable to other industries.

https://dspace.lib.cranfield.ac.uk/bitstream/handle/1826/8269/Securing_Executive_Buy-in_for_Preventative_Risk_Management-2011.pdf;jsessionid=0D20BFD6A28568C7977458A9A0147211?sequence=1

Building ERM Buy-in

In this short article published in The Actuary, Sherrill and Segal explained how switching to a value-based ERM approach overcomes the limitations of a capital-based approach, achieves buy-in, paves the way for the ERM program to expand its reach and engages the CRO in the organization’s most important decisions.

https://theactuarymagazine.org/building-erm-buy-in/

Effective ERM Stakeholder Engagement

This report sponsored by JRMS identified the challenges of getting ERM buy-in from surveys conducted to understand the current practices of enterprise risk management. To address these key issues, it also provided suggested solutions including ERM stakeholder analysis, effective communication, personalized training, quantifying tangible benefits of an investment in risk management capabilities, performing validation of ERM analysis, and promoting accountability and healthy risk culture.

https://www.soa.org/globalassets/assets/files/resources/research-report/2018/effective-erm-stakeholder.pdf

Effective ERM Can Promote Stakeholder Balance

In this article, Fox emphasized aligning ERM with corporate mission and vision, and provided suggestions on using effective ERM to create stakeholder balance, not just benefits to shareholders.

https://erm.ncsu.edu/az/erm/i/chan/library/Effective_ERM_Can_Promote_Stakeholder_Balance.pdf

Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries, the editors, or the respective authors’ employers.


Kailan Shang, FSA, CFA, PRM, SCJP, is currently a coeditor of the JRMS newsletter and is associate director for Aon PathWise. He can be contacted at kevin.shang@aon.com. https://ca.linkedin.com/in/kailan-shang-2270668.


References

Fox, David, “Effective ERM Can Promote Stakeholder Balance.” 2019. ERM Initiative, Poole College of Management, NC State University.

Shang, Kailan, “Effective ERM Stakeholder Engagement.” 2018.

Snow, Martin, Philip Sherill, and Sim Segal, “Building ERM Buy-in.” 2019, The Actuary.

Summerill, S.J.T. Pollard, J.A. Smith, B. Breach, and T. Williams, “Securing Executive Buy-in for Preventative Risk Management – Lessons from Water Safety Plans.” 2011, Water Science & Technology: Water Supply, V11, No.6: 682-691.