THE ROLE OF ORGANISATIONAL CHANGE IN EFFECTIVE ENTERPRISE RISK MANAGEMENT

The value proposition of Enterprise Risk Management (ERM) seems in many ways compelling. ERM seeks to build upon traditional risk management practices that are conducted within functional or programmatic siloes, and engage in the cross silo conversations and prioritisations needed to develop an enterprise-level, portfolio view of risk. The ultimate goal is improved return on investment in meeting overall stakeholder needs. Why would any organisation not strive to achieve such an integrated view of organisational risk?

Yet despite the inherent appeal of ERM, the allure and the reality are different for many organisations. Organisations are finding that what seems on the surface like such an obvious step forward is in fact a long-term commitment that requires both planning and resources. What is the difference between an organisation that establishes a vision for ERM and makes methodical progress towards that goal, and an organisation that seems to flounder and face more than its share of detours? Answering this question requires considering what makes any major initiative more challenging than often envisioned, and how such general challenges apply to ERM in particular.

Numerous studies over the past two decades, beginning with that of organisational change guru John Kotter, have shown that only 30 percent of change programs are considered fully successful. That poor level of success has remained relatively consistent as evidenced by repeated studies over more than 20 years. Mr Kotter’s research and that of numerous studies since have pointed to the inadequate attention provided to organisational change management. In this context, we are not referring to the changes in policies, procedures and various actions reflected in a project plan. Most initiatives pay considerable attention to the physical changes that must take place to implement any organisational change initiative.

Jul-Sep 2014 Issue

Cambio Consulting Group