The first ever World Risk Day was held around the world on Tuesday, June 26 and without question it was a huge success. By all accounts it was the largest virtual risk summit every staged and featured 25 speakers spanning industries and countries, all talking about the same thing… the need for organizations to take risks to stay ahead and succeed.
So what were the BIG ideas from World Risk Day and what do they teach us?
1. Risk is not a 4-letter word
Almost every speaker on World Risk Day, whether it was the EVP from Solvay, the CEO from Coastal Contacts or the CFO from CPS Energy agreed on a common theme. Risk is not a bad thing. In fact, the opposite was seen as true. Risk is a positive for business, and should be viewed in a positive light, as long as it is smart, well informed risk.
2. Successful enterprise is built on a foundation of taking smart risks
World Risk Day brought together senior executives from around the world, and they all agreed. You must take risks to succeed. You must take risks to grow, and you must take risks to achieve your strategy. Not a single person suggested that risk taking was a bad idea. Success in business is about taking smarter risks.
3. The risk management industry is in the middle of a massive change in approach
Risk management is not about compliance. This message was loud and clear throughout the day. Simply focusing on compliance and audit was not going to make you better at risk management. Effective risk management is about focusing on how risk can improve your ability to hit your goals, drive efficiency and improve operations.
Compliance, while important, should not be the focus. The entire risk industry is moving towards a more integrated, enterprise view of risk management. This is a view and approach which is focused on managing risks across silos, managing risk at every level of the business and employing a management-supported approach. The old days of relying on your audit department, insurance providers and compliance policies to manage risk are dead.
4. Effective Risk Management is about everyday activities
To achieve your goals and drive your strategy, risk management has to become part of your everyday business. Each member of the company must understand their role in the risk management process, and the organization must be able to manage the upside and downside of risks in everyday activities. Organizations don’t fail the big items, they fail the small, repetitive, everyday activities which enable the big items. ERM is about the risk of the everyday.
5. Risk Management Drives Growth, Enables Strategy and Enhances Value
Enterprise Risk Management drives real, tangible benefits. 3X EBITDA, 2X Market to Book Value, Cost reductions, 3-5% Enterprise Value Growth… these are just some of the real, top and bottom line benefits seen with the implementation of ERM in organizations.
ERM drives visibility, accountability and confidence. ERM is a competitive differentiator. Almost every executive who spoke on World Risk Day talked about how the implementation of Enterprise Risk Management enhanced their organization’s ability to meet their goals, improved bottom-line results, drove stakeholder value and increased confidence. The speakers talked about ERM as vital to their success, helping to uncover previously unknown opportunities, while providing leading indicators of issues, much sooner than previously possible.
What does this all mean for you? Simple. Enterprise Risk Management = Success.
We know we must take risks to succeed, but we also know we must take smarter risks.
ERM helps organizations take smarter risks. ERM helps organizations drive confidence. ERM helps organizations achieve their goals.
How can your organization move forward in your ability to effectively manage risk?