ERM, or enterprise risk management, has become increasingly popular in recent years as businesses of all sizes have embraced the comprehensive approach that involves continual input aimed at managing all risks faced by a company.
Before you can develop strategies to address emerging risks, you need a framework that provides an overall assessment of your company's risks and risk level.
Think of an ERM framework as a viewing platform that helps your business understand risks across the entire organization.
Not sure how to begin? Here are a few guidelines to get you started.
Steps to build an ERM framework
- Appoint a steering committee. Establishing a committee to oversee the process will help your company stay focused and avoid duplicated effort that wastes time and money.
- Assign responsibilities. Clearly define and document the roles of everyone who contributes to the ERM plan to prevent confusion.
- Identify risks and prioritize them. Gather input from ERM participants to determine which risks are most pressing and decide the order in which to address them.
- Design plans to monitor and report actions and results. Put regular reporting and metrics in place so outcomes can be tracked and team members held accountable.
Unless you track results and outcomes, you won't know what's working and what's not; use clear metrics and scheduled reporting to measure progress.
ERM is a dynamic, ongoing process that should evolve with your business; review your ERM program continuously with stakeholders from all levels.
For a broader discussion of insurance and risk management options, see Insurance & Risk Management Overview.
If your business has industry-specific exposures, review relevant coverage pages such as Insurance for Microdermabrasion to understand common considerations.
If you need help implementing an ERM program, talk to an agent.
Frequently Asked Questions
What is ERM and why is it important?
ERM is a structured approach to identify, assess, and manage risks across an organization; it helps prioritize resources and improve decision-making.
How often should an ERM program be reviewed?
Review ERM at least annually and more often when your business changes significantly, with input from stakeholders across the organization.
Who should be involved in building an ERM framework?
A cross-functional steering committee plus managers and staff who understand operational risks—typically risk, finance, compliance, and business leadership.