5 ways ERM and resiliency can create a robust enterprise together

Here are five ways that ERM and resiliency can work together to create a robust enterprise:

1. Strategic alignment and risk appetite

A resilient enterprise aligns its risk management strategies with its business objectives and risk appetite. ERM facilitates this by providing a framework for risk assessment and by clearly articulating risk profiles in concert with the company’s strategic direction.
In essence, the assessments help in defining the organization’s risk tolerance and inform the development of the strategic resilience program. By identifying and analyzing risks that could impede strategic goals, ERM provides essential insights that guide the operational implementation of resilience, helping to establish strategies that resonate with the organization’s strategic objectives and risk appetite.

2. Business continuity and disaster recovery

ERM plays a vital role in identifying critical business processes and potential risks, forming the basis for robust business continuity and disaster recovery plans. Resilience helps to enforce these plans are more than just documents; they are actionable, regularly tested, and embedded in the organizational culture. A business impact analysis (BIA)¹ is a joint effort whereby ERM evaluates disruption impacts on key functions and resilience principles determine the severity. These evaluations inform recovery strategies that are in line with the organization’s risk appetite and are continually tested to become core components of
the organization’s operational practices. This integrated approach cultivates a culture ready to handle disruptions and recover swiftly, preserving critical operations.

3. Crisis management and communication

With the speed of social media, having an effective crisis management program is not only a cornerstone but an essential part of strategic resilience. ERM equips organizations with the necessary tools to identify potential crises, assess their impact and create detailed crisis management plans with customized disruption scenarios. This establishes a robust crisis management framework with clear triggers and protocols for swift response, all supported by a governance structure that defines roles for the crisis team’s preparedness. Complementing this, tabletop simulations and training exercises confirm the organization’s resilience, while a crisis management playbook and communications strategy guide actions and messaging during a crisis, maintaining stakeholder trust and demonstrating strategic resilience. Resiliency helps safeguard that the organization can execute these plans effectively under stress.

4. Supply chain and vendor risk management

In an interconnected world, a resilient enterprise needs a robust supply chain capable of withstanding diverse risks. ERM identifies key suppliers and vulnerabilities, guiding the creation of adaptable risk mitigation strategies. Resiliency enables these strategies to be flexible and adaptive – particularly with artificial intelligence (AI) and predictive analytics – allowing organizations to maintain operations even if a key supplier is compromised. The strategic integration of ERM and resilience is demonstrated through asset mapping, which catalogs essential resources and adapts to the fluid nature of the supply chain. This process, coupled with third-party dependency management, creates a comprehensive approach to supply chain integrity, helping to establish thorough coverage of all facets and enhancing the organization’s overall resilience.

5. Cybersecurity and information security

Integrating ERM and resilience is essential for safeguarding an organization’s digital assets against evolving cyber threats. ERM identifies cyber risks and their business impact, and is complemented by resilience measures that prepare for, respond to and recover from cyber incidents, preserving the integrity and confidentiality of digital operations. Organizations leverage ERM assessments to adopt new technologies that align with their risk appetite and strategic goals, turning resilience into a strategic asset. A resilient cybersecurity posture, underpinned by strong internal controls and adherence to regulations such as the EU’s General Data Protection Regulation (GDPR) and Digital Operational Resilience Act (DORA)², enables quick incident recovery and the ability to capitalize on opportunities during disruptions, enhancing overall operational resilience.

Enhancing resilience through strategic external benchmarking

External benchmarking plays a vital role in a resilient enterprise. It involves strategically comparing an organization’s risk management and resiliency practices with those of peers and industry leaders. This outside-in view provides valuable insights into leading practices and emerging trends, helping organizations to identify areas for improvement and innovation. Benchmarking also helps in setting realistic and competitive targets for risk management performance and resiliency capabilities.

Five ERM accelerators to advance your organization’s resilience journey

Organizations can strategically apply ERM to build resilience, utilizing five key ERM tools to establish a resilient enterprise foundation:

1. Conduct risk assessments: ERM identifies and evaluates risks to prioritize resilience efforts.
2. Engage in risk quantification: ERM uses quantitative analysis to gauge risk impacts and guide resilience strategies.
3. Encourage scenario planning: ERM supports scenario planning for readiness against various potential risks.
4. Establish risk monitoring: ERM sets up continuous risk monitoring to maintain effective resilience measures.
5. Strengthen risk governance: ERM promotes robust governance to integrate resilience into the organization’s culture.

This approach better readies organizations for future challenges and better enables them to capitalize on growth opportunities, using resilience as a strategic asset in a dynamic business landscape.