When we think of solutions, we tend to think about technology and software and implementation—which is fine if the decision to launch an enterprise risk management (ERM) initiative has already been made, the due diligence completed, and the vendor lined up.
But what about that very first step—getting senior management to buy into an enterprise risk management (ERM) system?
Their support is absolutely critical for success—without it the whole process will ultimately be a waste of time and money and damage employee (and possibly customer) morale.
So for company leaders who are cautious, reluctant to spend money, resist change, and happy with the status quo (and as a result are busier than they should be putting out fires), how do you get them to embrace enterprise risk management?
Try story-boarding, advises John Bugalla, a senior enterprise risk management consultant with ermINSIGHTS (www.erminsights.com).
In an October 2012 article in Risk Management Magazine (www.rims.org), Bugalla explains how storyboarding is a pre-production phase of movie-making in which the various scenes and camera angles are sketched out on sheets of paper or white boards. This is done in order to fully understand what it will take to create a successful scene—essentially completing their due diligence before committing time and money to the actual filming, the most expensive part of the process.
“ERM storyboarding is a derivative process where the goal is to deliver a pitch to senior management for support and approval for the adoption and implementation of ERM,” says Bugalla. “Thus, ERM storyboarding is a campaign that brings together the creative and technical elements in such a way as to make the story line so compelling that the choice is obvious. Keeping the message and medium simple is key, because if the story is perceived as too complex or disjointed, it will not catch the attention of the audience and could ruin chances for approval at any level.”
Therefore, notes Bugalla, an effective ERM storyboard should cover all the ways ERM will contribute to the organization’s top and bottom lines. “The storyboard should include the particulars of the master plan, including installation, implementation, and inculcation of ERM culture within the organization,” he says. “It should also introduce the uniqueness of the risk/reward message summaries that connect the identification of the risks with actionable resource reallocation.”
Be sure to keep in mind the diversity of the management team and each member’s special interests—the storyboard must also address individual perspectives, interests, and concerns and provide specific benefits that resonate with each member of the team.
“For example, the board of directors has keen interest in issues related to governance,” says Bugalla. “The CEO, COO, and CFO are interested in how ERM can support the creation of new value for the organization and its stakeholders. Value means different things to different people within the organization, but raising the stock price, increasing revenue and cash flow, developing new products and services, and reducing the cost of capital always top their list. The general counsel and internal auditor, meanwhile, focus on compliance and control issues such as laws, regulations, and financial reporting.”
The first step in creating the ERM storyboard is conducting research and gathering relevant data—a process that is not as easy as it sounds.
“Personal meetings with a diverse group of internal colleagues should be planned in order to gain support, as well as extract risk and opportunity information,” adds Bugalla. “And the meetings should aim to assure both organizational leadership and middle management that ERM activities will not be burdensome or intrusive to their operations.”
It is critical to develop a core message for the presentation that shows how implementing ERM creates value over time—higher quality, fewer adverse events and customer complaints, greater efficiency, easier compliance, reduced costs, faster time to market, and overall improved manufacturability and competitiveness. Using real-life case studies within your industry is always an effective way to illustrate value.
“The message might also include a cautionary note about how the ERM process can uncover organizational weaknesses and expose hidden opportunities that the company might want to exploit before its competitors do,” says Bugalla. “The goals, objectives, and timeline for installation of the ERM program must be clear, noting that over time the process will succeed because of its adaptability to ever-changing business and regulatory environments.”
The last step is delivering the presentation in person. Keep it short—no more than 15 minutes and fewer than 20 PowerPoint slides.
“The research done early in the ERM storyboarding process yields thoughts, opinions, and most important of all, relationships,” Bugalla concludes. “Build on these relationships by including subject matter experts as part of the development team. If the experts and managers are part of the development process and buy into the collaboration, adversaries disappear and support for ERM takes on a life of its own.”