Supercharging your ERM/risk program

Supercharging your ERM/risk program

Craig Spielmann, CEO at RiskTao, LLC, shares his insight on Enterprise Risk Management frameworks.

A few years ago at a major operational risk conference, the Federal Reserve and OCC presented operational risk’s role in the financial crisis. They stated that it was the “most critical risk “ to the continued health of the financial industry and gave sound logic for their proclamation.

I presented directly after them on “Operational Risk Needing a Facelift.” I started by asking the 400 plus operational risk professionals in the room, if they expected their budgets to increase given it was cited as the most critical risk. Not a single hand was raised. I asked, “How many expected to have their budgets cut?” Half the room raised their hands. This seemed illogical on the surface. The “most important risk,” but instead of investing, there was an expectation of budge cuts. This should alarm most people and speaks volumes to the “perceived value proposition.”

Another perspective comes from my own personal experiences conducting ERM/ORM and risk workshops at conferences and individual institutions. Towards the end of each workshop, I ask participants to break into groups. I supply them with a list of 10 critical questions. The tenth question is: “Would you pay for your own services?” The vast majority of the groups answer “No.” My sessions usually include all three lines of defense as well as front line business people and regulators (at the open conference sessions). So it would seem, the desire for improvement and is across the board.

These data points tell us that some risk functions need to transform to add value. The feedback I receive from risk professional is that they believe they have become overly “administrative in nature” and improving and guiding the business to achieve their goals within risk appetite, is secondary.

Here are recommendations to improve the value proposition:
1. Strive for Excellence – Organizations must recognize and invest in risk transformation to gain a competitive edge and achieve a high return.
2. Run Risk as a Business – Risks groups should run as “business, “ understand their value by assessing from their stakeholders perspective, their people, products and services, processes and technology to effectively compete and maximize value.
3. Strategic Alignment – Risk has to be involved in strategic planning to make a significant contribution and be in-step with the organization.
4. Talent – Organizations need to attract and keep talent. This includes having a “skills model” aligned against goals blended with a smart compensation structure.

In conclusion, risk management and business management are one in the same. The alignment between the two is paramount to running a successful business. There is a better path to achieving this seamless integration goal. There is much more value that can be generated by transform risk into a “business.” As we learned in the financial crisis, getting it right can generate a competitive edge and a high ROI.

We addressed all of these items and more in the “Supercharging Your ERM/Risk Program Master Class” sponsored by the Center for Financial Professionals at the 3rd Annual Operational & Enterprise Risk Management Congress, October 19-20 in New York City. I hope this article stimulates your ideas and creates dialogue in your organization.

Please feel free to contact me at or visit our website at

Find out more about and register for Craig’s Supercharging your ERM program master class here.