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Enterprise Risk Management (ERM) is a structured, consistent, and continuous process applied across an entire organization that allows companies to better understand and address their material risks. Rating agencies, regulatory bodies, and corporate boards are among the key drivers for advancing ERM. The implementation of ERM can facilitate better capital resource allocation decisions, increase operational efficiency, and enhance a company's risk control efforts to support critical compliance and governance initiatives.
MRC's ERM framework helps clients in their efforts to identify and assess material risks, develop specific mitigation strategies, and design enterprise-wide technology platforms that help clients meet their resource and financial objectives as well as ongoing monitoring and reporting obligations under applicable governance and regulatory requirements.
What Will You Say When They Ask What Happened?
When evaluating either their current or future ERM capabilities, senior managers need to be asking themselves the following questions:
- Do you know what your organization's key material risks are?
- Does your organization's senior leadership agree on the critical risks?
- Has your organization established a risk tolerance, risk appetite, and goverance structure?
- What does your organization do to monitor and address material risks?
- Are important risk management functions working together?
- Does your organization have a plan to improve the management of under-managed and over-managed risks?
- Is your organization in compliance with new SEC risk disclosure rules, rating agency requirements, and best practice risk management standards such as ISO 31000?
Who’s Looking Out for You?
Our ERM experts can help organizations create a holistic, enterprise-risk aware culture, drawing upon MRC's expertise in industry issues, risk analysis, organizational change, and risk technoglogy.
Our team of specialists analyze risk from an integrated perspective, exploring risk relationships within your organization to create a more sophisticated understanding of your company's material risks. Whether your company is just beginning the ERM journey or has an established framework in place, MRC can assist you in your ERM efforts.
ERM consulting engagements generally fall into the following three stages:
- An assessment of current state ERM initiatives
- A design for a 'future state' of ERM
- The implementation of ERM infrastructure
Typical deliverables include:
1. Identification, assessment, analysis, and prioritization
- Benchmarking/Gap Analysis
When considering the steps necessary to implement an ERM framework, it is useful to first identify and compare your organization's existing capabilities relative to what capabilities management you would like to have in place. MRC's specialists provide a current state assessment, as well as a gap analysis against best practices and a benchmarking report.
- Risk Identification and Assessment
Risk identification and assessment is a critical framework component. We take a structured approach to assess risks specific to your industry. This includes the collection, identification, categorization, prioritization, and mapping of risks to align with your organization's business objectives and strategy. The result is a strategic organizational risk map.
- Risk Analysis
Risk analysis enables you to better understand the impact risk has on your organization and your business objectives. MRC takes a disciplined approach to understanding your risk appetite and developing tolerance thresholds; modeling risks and their variance; providing an analysis of the project impact of mitigation strategies; assisting you in determining optimal capital allocation; and considering the upside of risk to your business.
- Risk Evaluation
A systematic ERM approach calls for the analysis of possible actions taken with respect to each risk–accepting it, managing it, or exploiting it. Moreover, these options typically necessitate an implementation plan. MRC offers an evaluation of risk treatment options including the projected costs and benefits; identification of risk ownership; the recommendation of tailored solutions appropriate to your business and objectives; and the implementation of risk mitigation strategies.
2. Framework design, implementation, and reporting
- Organizational Implementation
Instilling a risk-based culture is crucial to realizing the ongoing benefits from ERM. MRC works with you to enhance existing processes or create new ones. Activities can include building communication protocols based on a "common language" for discussing risk; enhancing risk governance frameworks; and integrating risk management activity into your control and compliance framework. As a follow-up to these activities, we provide you with an implementation roadmap to assist with organizational change.
- Risk Reporting
Managing risk across the enterprise requires coordination. The information produced by the various businesses and risk management functions in the risk assessment and analysis phases must be disseminated so that the right people are given the right information at the right time to make informed business decisions. MRC can help you determine the appropriate needs of your business, its management, and key constituents, and assists in the design of meaningful communication processes and materials. We accomplish this through a material risk scorecard and ongoing tracking of key risk indicators utilizing technology plaforms.
- Technology Stragegies
In an effort to sustain risk monitoring and to make risk reporting more efficient, many organizations are turning to technology to support their ERM framework. MRC works with you to establish principle business requirements; recommends technology solutions; assists you in the development and implementation of a technology infrastructure; and evaluates various software applications.
ERM is a flexible and scalable approach to suit the specific objectives and needs of a company, which can be applied accross an entire organization, or tailored to address specific areas of concern or focus.
If you have any questions or would like additional information, please contact us.
If you are seeking information about insurance and related services, please visit marsh.com.
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