Michael Saltzstein on Uniting Risk Management with Strategic Planning

Michael Saltzstein believes the ever-changing and ever-expanding needs of a business necessitate a thorough rethinking of the risk management process. A recent update to the COSO's enterprise risk management (ERM) framework offers new ideas on how companies can preserve their business's value, if not enhance it, by incorporating and examining risks from the strategy formulation stage.

This approach elevates ERM from an operational- and compliance-focused information-gathering and reporting model to a strategy-focused model that can add value to organizations. However, implementing the change is a challenge in and of itself, as organizations, particularly larger ones, are hesitant to redefine their existing ERM process without a precise cost/benefit analysis that demonstrates added value.

As Michael Saltzstein indicates, it’s important to address how risk management professionals can persuade decision-makers to incorporate risk management insights identified through the organization's ERM process into strategic planning.

Many would agree that adopting more sophisticated ERM systems improves corporate governance. In addition, there is a direct correlation between the maturity of the ERM system and the robustness of the entity's oversight and management.

Maintaining the status quo—that is, not connecting ERM with strategy and performance and not changing any business processes accordingly—may result in a critical failure that proves too costly for any company to bear, even in the most remote of scenarios. There are numerous examples of strategic corporate crises brought on by emerging risks that disrupted the organization's core business model. In other cases, unexpected low-probability but catastrophic events—"black swans"—have proven fatal to businesses when they do occur.

According to research conducted as part of the Association of International Certified Professional Accountants and North Carolina State University's Enterprise Risk Management Initiative for the 2017 Global Risk Oversight Report, companies find integrating risk into a strategy challenging. Fewer than 20% of organizations surveyed for the report in Europe, the United Kingdom, and the United States believe their risk management processes provide a distinct competitive advantage. In addition, only about half of global respondents agreed with the statement, "Companies must consider risk exposures when evaluating new strategic initiatives." The research concludes a global disconnect between enterprise risk oversight and strategy execution.

Comments

Effective Strategies for A Win-Win Negotiation

pexels.com Leaders like Michael Saltzstein are constantly engaged in some form of negotiation. They have to negotiate with customers, other businesses, or parties external to the organization. In many cases, they also have to participate in discussions with partners and team members. Negotiations have to be fair and well-balanced to ensure that both parties involved will benefit in the long run. This article explores some strategies that can help leaders encourage a win-win negotiation. Prepare and be knowledgeable . Before coming to the negotiating table, you must have reviewed all the information necessary for the discussion. Furthermore, it would be advantageous to have already identified the alternatives that are available for both your organization and the other side. This is only possible if proper research and analysis have been conducted. Set up multiple offers. A common mistake that has been committed time and again when it comes to negotiating is having only one offer on t...

What business leaders are learning from the Coronavirus outbreak

Image source: businessinsider.com The onset of the Coronavirus or COVID-19 has been a shock to businesses throughout the country. Because of state-wide lockdowns and preventive measures, almost every business has had to adjust in one form or another in order to ensure the continuation of operations and secure the safety of employees. Unfortunately, not every business can operate under these new conditions. Michael Saltzstein predicts that this outbreak will force most businesses to adjust to a new reality. And while this outbreak will eventually pass, it shouldn’t stop business leaders from learning something new from this unique experience. Here are some lessons business leaders are learning from the pandemic. Business continuity plans were tested It’s hard to imagine a multinational corporation ceasing operations. That is until now. Seemingly large operations that may seem too big to stop had to grind into a halt. Businesses that have emergency continuity plans have...

Michael Saltzstein: Three Ways to Effectively Motivate Your Team

Unsplash.com Michael Saltzstein on Ways Leaders Can Encourage Their Employees Michael Saltzstein emphasizes that employee motivation is important to keep a business thriving. As an industry leader, he knows managers have a role to play in empowering the people they work with. While it's important to act professionally, workplaces don't need to be places of apathy. Instead, executives, supervisors, and other superiors can be encouraging authority figures that inspire employees to do their best. Michael Saltzstein suggests these three ways to effectively motivate your work team. Be open with employees. While there may always be some information you shouldn't share with your employees, it's important to relay necessary information about the company, the department, and even the team. Providing regular updates on projects and policies will give employees a sense of security. Doing so will also keep them on the same page regarding the firm's goals and overall dire...

Michael Saltzstein

Search This Blog