What do you mean by clear communication of a corporate risk/reward strategy?
Every organization should have a strategy that specifies its beliefs regarding appropriate risks.
This strategy should be developed by management in conjunction with the board; however, it must be communicated to members of the organization at all levels in order for them to act in accordance with this strategy.
Communication of this strategy requires management to do more than circulate a memorandum regarding the strategy; it requires that they demonstrate adherence to the strategy through their actions and decisions.
How can risks best be identified and assessed?
While high-level executives are often tasked with managing organizational risks, it is important that employees of all levels participate in risk identification and assessment processes. Employees are on the front lines, and may see organizational risks differently than their managers. Including employees in the risk identification and assessment processes can help executives obtain a full and complete perspective of identified risks.
One important point, however, is that executives may want to meet with managers and employees separately in order to foster more candid dialogue and discussion.
Who monitors the risk management process?
Monitoring is a key component of an ERM process, and requires involvement from employees, managers, executives, and board members. In brief, all members of the organization — at all levels — must be involved in monitoring activities.
Using such a comprehensive approach to monitoring assists those managing ERM processes to more clearly understand any gaps that exist between risk management plans and execution.
It also helps individuals take ownership of the ERM process by empowering them through the oversight process.
HARRY CENDROWSKI is managing director for Cendrowski Corporate Advisors LLC. Reach him at [email protected] or (866) 717-1607, or visit the company’s Web site at www.cca-advisors.com.
