Enterprise Risk Management, 2nd Edition

CHAPTER 34Leveraging ERM for Growth

 

DIANA DEL BEL BELLUZ

President, Risk Wise Inc.

 

INTRODUCTION

From its beginnings, the value proposition of enterprise risk management (ERM) has been described as enabling companies to take upside risks confidently in pursuit of corporate goals and objectives. ERM was often likened to having brakes on an automobile. Just knowing that ERM acts as a brake pedal that limits downside risks (losses, waste, and underperformance), gives organizations the confidence to step on the accelerator pedal and pursue upside risks (growth and innovation).

Research into the state of ERM practice¹ demonstrates that ERM programs have achieved a high degree of success in providing the brake, that is, embedding a defensive stance against exposure to risks that would cause major losses or impede the achievement of objectives. Yet few ERM programs have been able to connect ERM to the accelerator pedal in a way that inspires the confident risk taking necessary for growth and innovation. When ERM is a strong brake with a weak link to the accelerator, it actually can become a drag on value.

We believe that the failure to embed a risk lens into decision making is the main reason that ERM has not yet lived up to its full potential to help organizations maximize the value they create. In this chapter, we present a rethinking of risk through a growth lens and explore ways the ERM discipline can be a much stronger contributor of value to organizations.

RETHINKING RISK ...