Exposed Secrets Of How To Apply Enterprise Risk Management Strategies On A Beer Budget

Every day it seems like another article in the news warns that no company, from a small private company to a conglomerate,is immune from dealing with business risks. Names like Levitz, Sharper Image, Linens n Things and Circuit City are not supposed to disappear in what seems to an overnight timeframe.

Yet the idea of creating or improving an Enterprise Risk Management (ERM) program to anticipate or plan for business risks sounds overwhelming in terms of the time and money it would take. Just think of those Sarbanes Oxley nightmares and overruns. In this volatile economic climate where cash and liquidity must be husbanded, how do you afford such a champagne sounding budget item in a beer budget reality world? Adding more urgency to starting the process, now your company credit rating may be directly affected by the quality of its risk contingency plan.

For those growing or middle market companies with no ERM program or just a shell of a program, consider the following focused tactical steps to start the ERM process even when operating under cash-constrained budgets.

Decide you will create an action plan.
Identify three to five critical risk areas that apply specifically to your business.
Project at least the next step to work on each of those risk areas identified.
Set target dates for completion.
Assign a follow-up method to evaluate where you are in the process.

Some of you will recognize elements of contingency planning, a due diligence review, an acquisition review, a merger and acquisition review, an operational assessment or even a strategic planning facilitated top management session in this approach. Whichever of those activities you or your company have been involved in the past will help create this beer budget version to at least get started in the risk management arena.

Those companies that do not know where or how to begin the process will be pleased to learn that Standard & Poor has created a risk report that provides an extensive list of risk categories companies should consider when developing an ERM strategy. For more information on the report, go the website for standardandpoor.

When the economic climate changes as dramatically and as frequently as it does nowadays, contingency planning and risk management should be on every executive dashboard regardless of the size of the organization. The author issues the clarion call: Face your risks squarely and come up with an adaptable ERM plan. Do not wait until you are forced to make a Mayday call to a world that is embroiled in its own crisis.