How can you evaluate the effectiveness of your ERM framework?

2 Benchmark your framework

The second step is to benchmark your ERM framework against the best practices and standards in your industry and sector. You can utilize external sources, like ISO 31000 or COSO ERM, to compare and evaluate your ERM framework. Additionally, internal sources, such as audits, reviews, or feedback, can be used to identify the strengths and weaknesses of your ERM framework. When benchmarking, consider the scope and coverage of your ERM framework, the roles and responsibilities of stakeholders, the processes and tools of activities, the integration and alignment with strategy and operations, and the communication and reporting of outcomes.

3 Monitor and review your framework

The third step is to monitor and review your ERM framework on a regular basis and adjust it as needed. You should have a systematic and consistent process to collect and analyze data on your risks and performance, as well as a feedback mechanism to solicit input from stakeholders. To do this, you should conduct risk assessments and evaluations at different levels and intervals, measure and report on your risk indicators and metrics, review and update your risk appetite and tolerance, identify and implement risk mitigation and improvement actions, and evaluate and communicate the value of your ERM framework.

4 Learn and innovate your framework

The fourth step is to learn and innovate your ERM framework to keep it relevant and effective in a changing environment. To do this, you should foster a culture of learning and innovation that encourages and supports your ERM stakeholders to explore and experiment with new ideas and approaches. Additionally, have a mechanism to capture and share the lessons and best practices from your ERM experiences. Some ways to learn and innovate include conducting root cause analysis and post-mortem reviews on risk events and incidents, benchmarking the best practices from other organizations or sectors, conducting scenario analysis on emerging risks, testing new risk management methods, piloting new technologies, and recognizing the achievements of your ERM stakeholders.

5 Engage and align your stakeholders

Engaging and aligning stakeholders with an ERM framework and goals is the fifth step. To do this, you should have a clear and compelling vision and value proposition that can motivate and inspire stakeholders. Additionally, having a stakeholder engagement plan is essential for effective and efficient communication and collaboration. Strategies to engage and align include defining roles and expectations, providing training and development of ERM skills, soliciting feedback, establishing trust and transparency in processes and outcomes, and celebrating successes.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?