The idea of a “tipping point” has been around since Everett Rogers published the theory in 1962, and was reinforced in Malcolm Gladwell’s book The Tipping Point: How Little Things Can Make a Big Difference published in 2000. In short, the idea is about change and the rate of adoption. The book focuses, in particular, on understanding why change often happens as quickly and as unexpectedly as it does.

 

So how do ideas reach critical mass and has Enterprise Risk Management’s time come?

 

When Rogers first published the theory, he said that once an idea reaches a 15% to 18% adoption rate, it becomes very likely to ‘tip over’ to ultimately reach a saturation level of acceptance. After about one in six (the innovators and early adopters) accept something, the successive groups rapidly adopt the new idea in a typical bell curve progression and its market share (or diffusion level) takes off.

 

If Rogers’ theory is true, then the results of the 2011 RIMS Benchmark Survey indicate we are at the tipping point for ERM. As we saw in Carol Fox’s (RIMS Director of Strategic and Enterprise Risk Practice) webinar presentation on World Risk Day, 17% of the respondents stated that their risk management programs are fully integrated and address risk across the organization. This is a full 5% increase from the 12% who reported as much in 2009. The survey also showed that 80% of organizations either have, or are in the process of developing, an Enterprise Risk Management program.

 

What is driving the ERM adoption rate?

 

In addition to regulatory pressures for increased risk management, organizations are seeing how enhanced risk management improves their odds of success. Enterprise Risk Management is beginning to be viewed as an integral aspect of any well-run business – whether large or small, global or regional.

 

Enterprise Risk Management has been embraced and practiced by leading organizations for more than a decade. Its acceptance is now finally at the tipping point where ERM will be recognized as an indispensable tool for business success and an essential process for any organization to stay ahead of the curve.

 

Is ERM firmly on your board’s agenda? And are you surfing the wave or about to be hit as it crashes over you?

 

Sources:
World Risk Day Virtual Summit – The Tipping Points of Risk Management (by RIMS)
Risk Management Magazine

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