Can Middle Market & Privately Held Companies Benefit From Enterprise Risk Management (ERM)?
Larger, and publically-held, companies are often “spurred” to initiate enterprise risk management (ERM) programs by regulatory requirements or board members' and senior executives' experiences with other companies. However, for middle market and/or privately held companies, the fear of bureaucracy, perception of form over substance processes, and the lack of internal bandwidth to support the activities can be barriers to implementing what could be a value enhancing process.
So where’s the real value?
Consider the power of having visibility of all key risks that are currently facing your organization, and knowing that there are appropriate mitigation plans with owners and due dates assigned. You establish a culture of ownership and empowerment. You can run your business with that one sheet of paper you have in your hand.
Aligning each manager's key performance indicators (KPI's) with the strategic plan for the business and its potential risks instills an understanding of and commitment to the disciplines of risk management at all levels of the enterprise, and is a must have first-line defense no matter the size of your business operations.
Incorporating discussions of emerging risks (internal & external) into regular staff meetings will get leaders thinking outward and forward about risks and link key risks to projects and initiatives planned/underway to identify gaps and overlaps.
As your business grows and expands over time, additional monitoring and compliance layers can be added to your ERM scaffolding. This allows ERM to fit the business and risk appetite that makes sense to you whether you’re a startup or medium-sized enterprise.