Balancing Enterprise Risk Management and Enterprise Performance Management

In reviewing how and why Risk Management Processes failed, the GSMI includes several steps companies can take to develop a more effective approach to risk management. Included are suggestions for creating a more effective risk management culture.

They say that risk management needs to have a prominent place in the overall corporate agenda and be reinforced regularly to have sufficient power to drive the organization. An integrated risk culture will enable companies to assess risks and identify those for which controlling and mitigating actions are most warranted. Companies should also recalibrate incentive structures to ensure rewards encourage behaviors that create long-term shareholder value rather than focusing on the short term. Embedding these processes in an organization will enable companies to more consistently and effectively implement their chosen level of risk tolerance across the enterprise.