- Steve Schlarman
What is Risk Management Worth To Your Organization?
Frank Sinatra is an icon. No one can dispute that. But exactly how much of an icon? Sure, he was a prolific music entertainer, movie star, and the epitome of cool -- but does that make him “iconic”?
Noting that Sinatra sold approximately 11,415 years of music over the course of his career – enough to play from the time man invented farming until Captain Kirk took the command of the Starship Enterprise – puts more weight on the scale towards “iconic” status. My point is that numbers make an impact.
Most often, the benefits to an organization in taking a strategic and comprehensive approach to risk management are evident across different types of metrics, including fewer compliance violations, less disruptions, and more effective responses to operational events. This integrated risk management (IRM) approach seeks to connect different domains of risk management within a cohesive picture. It requires an extensive list of processes across different operational groups, creating a complex tapestry of activity.
Since “it takes a village” to manage risk, true financial impact of risk management is not something easy to calculate. Why would you need to calculate its impact? Well, risk management activities require investments in time and resources and someone along the way needs to foot the bill.
Can you put a number to the overall impact of an integrated risk management program? I explored this topic by applying a technique typically used for micro risks to this macro issue. Bow tie analysis is often used to analyze individual risk events but can also be applied at the macro level. To provide an illustrative example of this approach, I used Archer Insight to create multiple bow tie analyses of IRM elements and to determine a measurable impact. I then ran control scenarios utilizing common IRM processes against through these models. The result was an interesting exploration of the financial impact of IRM programs.
Want to learn more? You are cordially invited to register to attend our webinar, What Is Risk Management Worth To Your Organization? at 2:00pm Eastern on January 24, 2023. I hope you can attend!