ERM - Step 2

Connecting with People to Identify Enterprise-Level Risks

Connecting with People to Identify Enterprise-Level Risks

In our journey through Enterprise Risk Management (ERM), we've already covered the critical first step of Holistic Evaluation, where we recognized that all risks are interconnected and that they span internal and external environments, systems, and relationships. Now, as we progress to Step 2, we shift our focus to people. In this article, we explore the importance of "Connecting with People" to identify enterprise-level risks effectively.

The Human Element in Risk Management

While technology and data analytics play a significant role in ERM, it's important to remember that risk management is ultimately a human endeavor. People drive processes, make decisions, and interact with the systems and environments that form the foundation of your organization. Recognizing this, it's crucial to engage with all stakeholders, from senior management to middle management and board members, to gain a comprehensive perspective on enterprise-level risks.

Collaboration Across Hierarchies

Enterprise-level risks are not limited to a single department or level of management. They can impact the entire organization, from top to bottom. To identify and address these risks effectively, it's imperative to foster collaboration and open communication across all levels of your organization's hierarchy.

  1. Senior Management: Senior leaders often have a broad strategic view of the organization. They can provide insights into high-level risks related to the overall business strategy, market dynamics, and regulatory changes. Engaging with senior management ensures that you align risk management with your organization's strategic goals.
  2. Middle Management: Middle managers are the bridge between the strategic vision and day-to-day operations. They have valuable insights into operational risks, process inefficiencies, and emerging challenges within their respective departments. Engaging with middle management helps identify risks that may not be immediately visible at the executive level.
  3. Board Members: The board of directors has a fiduciary responsibility to oversee the organization's risk management practices. They bring an external perspective and can offer valuable guidance on governance, compliance, and long-term risk strategy. Involving board members in risk discussions ensures transparency and accountability.

The Power of Collective Wisdom

When you bring these stakeholders together to identify enterprise-level risks, you tap into the collective wisdom of your organization. Each group sees the risk landscape from a different vantage point, and their perspectives complement one another. This collaborative approach not only helps in identifying risks but also in prioritizing them based on their potential impact and likelihood.

Structured Risk Workshops

To facilitate effective communication and collaboration, consider organizing structured risk workshops or meetings. These sessions can be designed to encourage open dialogue, brainstorming, and the sharing of insights and concerns. During these workshops, stakeholders can collectively assess risks, discuss mitigation strategies, and develop action plans.

Technology as an Enabler

Technology can play a crucial role in connecting with people for risk identification. Risk management software and platforms can streamline the collection of data and insights from various stakeholders, making it easier to compile and analyze information for enterprise-level risk assessment.

In Conclusion

In Step 2 of our ERM journey, we emphasize the importance of connecting with people across all levels of your organization to identify enterprise-level risks. The insights and perspectives of senior management, middle management, and board members are invaluable in gaining a holistic view of your risk landscape. By fostering collaboration and open communication, you harness the collective wisdom of your organization to make informed decisions and strengthen your risk management strategy. Stay tuned for Step 3, where we'll delve into the crucial process of Risk Assessment and how to prioritize identified risks effectively.

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