Strategic Thought has created a risk management tool that incorporates an enterprise-wide approach.
The regulatory pressures now imposed on organizations, with increased focus on all aspects of corporate governance, require that risk management can no longer be left to be handled by experts in isolation. Senior executives, managers, and staff not only need to be aware of the issues, but also take an active role in the process.
Another essential element is the incorporation of feedback, especially from operational activities. The ability to compare and contrast previous performance and events during policy formulation enables earlier mistakes to be learnt from, and the effectiveness of the risk management processes to be evaluated.
Risk should not be perceived as always having negative connotations. It is essential to have the capability to be able to recognize and manage risk as an opportunity, as well as a threat. The whole risk management process is reliant on good communications and transparency, an indispensable component of which is a central repository, especially in a large organization with many employees and multiple physical locations. A single centralized repository is a must for this type of solution, with distributed data sources with near-time synchronization or roll-up inadequate.
This all-encompassing approach to risk management is frequently defined as enterprise risk management (ERM) and is embodied in Strategic Thought’s Closed-Loop Risk Management model, which drives its Active Risk Manager product strategy. It is also complementary to the various guidelines that are available, such as the Committee of Sponsoring Organizations of the Treadway Commission (COSO) ERM framework, Sarbanes-Oxley (SOX) S404, and the Turnbull Report.
Organizations need to improve risk management capability by shifting from the current siloed systems to an approach that involves the whole enterprise, including executive, managerial, and operational functions. Strategic Thought’s Active Risk Manager software provides a comprehensive solution underpinning an ERM approach.
Source: OpinionWire by Butler Group (www.butlergroup.com)
