What to Look for in an External ERM Resource or Consultant

Extending on our theme from last week on the people side of ERM, I want to outline some things I think organizations should look for in an external ERM resource (a.k.a. “consultant”).

Although I outline the skills and personal qualities of an effective ERM professional in a prior post, there are special considerations when looking for outside help.

While there will be circumstances specific to your organization, two considerations that will apply to anyone looking for an external ERM resource includes:

  1. Is the consultant looking out for your organization’s best interest?
  2. Is their personality, style, and skill set going to fit your organization?

Let’s dive into #1 first…

It’s sad but true – many consulting firms across a variety of specialties are going to be more concerned about maximizing their own income and profits than they are about doing what’s best for the client.

One example of this is a practice I abhor…

Some firms and even individual consultants will not be entirely forthright about what it will take to accomplish a particular goal. They will give 90% of what the organization needs, and when the time comes, reveal the final 10% of details in hopes of getting another gig!!

I encountered this in my former role as Director of ERM, and I couldn’t help but wonder – why would you wait to tell me this information? It was frustrating indeed…

Therefore, it’s important to make sure the consultant is not holding anything back.

Expanding on this a little, it’s vitally important to have a full conversation ahead of time to determine the appropriate scope and any necessities to achieving the project’s goals, whether the necessities are availabilities, resources, or software. Make sure the consultant is completely open, and there’s a clear understanding of who’s going to be responsible for what.

In addition to openness, is the consultant flexible?

It’s inevitable that plans will go awry. In looking out for your organization’s best interest, can the consultant offer alternatives should the original plan get off track? I believe having this flexibility is crucial to having a successful engagement with a consultant, because let’s face it, things rarely go as planned.

Personality and style – is it a fit for the organization?

The second broad consideration for finding the right external ERM resource is personality and style.

Much of this depends on project goals…

For example, if your organization is looking for outside help in developing reports for the board, you’re not going to want to hire someone specializing in data analysis. It’s highly unlikely they will possess the skills you need to develop reports that will be useful for decision-making.

On the flip side, if you need help analyzing risk information to come up with trends and interdependencies, or help with facilitating conversations about risks at the department level, you’re not going to want someone with lots of executive experience, like a former Chief Risk Officer.

Another thing to keep in mind is your organization’s culture and who you would be more comfortable dealing with. Do you prefer someone that seems more approachable and down-to-earth? Or is a highly formal, suit-and-tie consultant more in line with your organization’s culture?

When developing any procurement documents, consider including descriptive language that explains the ideal fit for your company’s culture so that the responding companies know in advance what you are looking for in a consultant. (If you don’t tell us, we can’t know. And trying to read your mind will just hurt both of us!)

Small firms vs. Big firms – Considering the Full Range of Options

In addition to looking out for your organization’s best interest and the consultant’s personality and style, I want to take a moment to draw out a few differences between small and big firms.

While I don’t very often, I’m going to toot my own horn here a little.

Many organizations seeking help with their ERM process automatically run to the big consulting firms believing they possess the resources and expertise needed for success.

I think this is a mistake…organizations shouldn’t forget that smaller firms can provide solutions just as or even better than a larger firm.

Smaller consulting firms are able to provide more individualized attention…they are more interested in forging long-term relationships.

Also, many larger consulting firms have a standardized approach they use for all of their clients, which is how they are able to take on so many projects at once. Cut, paste, rinse, and repeat…

Smaller firms like ERM Insights by Carol and others will be more thoughtful and deliberate and tailor solutions to fit the company’s industry, size, culture, and other factors. As I’ve explained here and elsewhere, what works for one organization may not work for another.

Something else to consider when comparing small consulting firms vs. big ones is overhead and costs.

Larger consulting firms have much higher overhead and expenses. They typically have larger teams of consultants with each person having a particular billing rate depending on their level of experience. Think multiple layers of people, each progressively more expensive.

Also, larger consulting firms will insist on traveling each week to the client’s site, which of course drives up costs for airline tickets, hotels, meals, and let’s not forget, the consultants’ travel time.

Smaller firms such as mine don’t carry this overhead – I rent half of an office suite in a low traffic area and bring my lunch most days. I focus on keeping my business expenses down so that my clients are not paying for an opulent office in a prime real estate location. My team either joins me here from time to time or works from home.

Who could leave this behind?

And since I’m a family person who wants to spend as much time as I can with my husband, our 3-year old son, and two dogs, I try to minimize travel to client sites. I’m not opposed to traveling, but with the technology we have at our disposal, it’s possible to get so much more done without getting on a plane.

Clients receive the same great service and the same amount of work at a much lower cost.

What has been your biggest struggle when trying to find the right external ERM resource to meet your organization’s needs? How were you able to overcome it?

I’m interested to learn more about the challenges risk professionals face in procuring outside help. Leave a comment below or join the conversation on LinkedIn.

And if you’re in search of a risk consultant who will look out for your organization’s best interest and tailor solutions to your unique circumstances, contact me to discuss your needs today.

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