How can ERM help bring value and insight during the strategic planning process?
Question asked by Anonymous
AFERM Experts Say...
Broadly, ERM brings value to the strategic planning process in several different ways. First, establishing the context stage of the ERM process provides understanding of major internal and external considerations that can enable the success of the strategic plan or present significant obstacles to achieving strategic goals and objectives. Armed with this understanding, the outcome of the strategic planning process can emphasize enablers and work to minimize potential barriers. A second value contribution stems from how OMB defines risk: “The effect of uncertainty on achievement of objectives. An effect is a deviation from the desired outcome – which may present positive or negative results” (emphasis added). Thinking about risk as “uncertainty” vice only as a potential threat, helps ERM provide input in strategic planning on potential new opportunities to pursue and increase the value the organization delivers through its programs and activities. The final value contribution ERM provides to strategic planning is providing the strategic planning team with a detailed understanding of potential impacts to the organization if a key risk event occurs, along with information on the approved risk response plans. Both of these elements can be used during strategic planning to help structure goals and objectives with a higher probability of success. This link is to a paper produced by the ERM Initiative at North Carolina State University that provides a couple of case studies on integrating ERM with strategy.