3 Easy to Use Tips to Understanding Why Executives Want ERM

Any endeavor, whether it is personal or in business, has a reason or motivation for its pursuit.

Take exercise for example…

If you’ve ever hit the gym, taken a Zumba class, or worked with a trainer, there was an underlying motivation. Example motivations are a desire to lose weight, build strength, build endurance so you can keep up with an active child, or just to improve overall health so you can have a better quality of life.

Understanding this motivation is a crucial part of ensuring your efforts are successful.

ERM is no different…

Often times, the company’s Board or executives decide and proclaim, sometimes with exuberance, that “we need to do ERM” but they do not communicate why.

Knowing why executives want ERM is critical to getting the result they want.

By not understanding executives’ motivation for pursuing ERM, you as the practitioner will simply be shooting in the dark…and the chance of you having to scrap everything and start from scratch is quite high.

Tip #1: Know the Desired End Result

To avoid this negative outcome and tarnish the reputation of both ERM and you personally, you must begin with the end in mind.

While not specific to ERM but relevant to unearthing why executives want it, “beginning with the end in mind” is in fact one of several habits author Stephen Covey details in his legendary book The 7 Habits of Highly Effective People.

One analogy Covey uses and that I’ve referenced in previous posts is the construction of a house. You have a vision of what you want in a home, but if you do not articulate this vision through blueprints and plans before you begin building, you will have to make expensive, time-consuming changes down the road. As Covey states:

We may be very busy, we may be very efficient, but we will also be truly effective only when we begin with the end in mind.

In the context of ERM and your organization, beginning with the end in mind means soliciting information from executives and understand what they’re trying to say and what they hope to accomplish. If you don’t know what they want to see as the end result, how will you be able to ensure you can help them get there?

Tip #2: Listen, don’t Lecture

It’s time for your one-on-one conversations with the executives. Don’t begin with a long monologue about what you do and how you’ll do it…this will just sound like a lecture. Instead, as this recent article discusses, keep the focus on your “client” instead of on you and what you do.

This also ties into another one of the 7 habits of highly effective people, which is “seek first to understand, then to be understood.” Again from Covey’s book…

Although it’s risky and hard, seek first to understand, or diagnose before you prescribe, is a correct principle manifest in many areas of life. It’s the mark of all true professionals [emphasis added]. It’s critical for the optometrist, it’s critical for the physician. You wouldn’t have any confidence in a doctor’s prescription unless you had confidence in the diagnoses.

Similar to beginning with the end in mind, seeking first to understand then to be understood means actively listening to executives about their concerns and goals. They are not interested in technical jargon and concepts like who will own risks or which standard you will use, but rather how ERM can help the company achieve its objectives, which is why you must translate risk terminology to fit the business.

Tip #3: Prepare and Adapt

You will want to have some questions prepared for your conversation. In fact, I provided some suggestions below to help you. But remember that each executive will take the conversation in different directions, so be prepared to adapt your questions to fit the circumstances.

And please, please don’t sound like you are reading from a script! You need to sound relaxed, conversational. Just because the other person is an executive doesn’t mean you can’t talk to them as a person.

Sample questions for understanding why executives are asking for ERM…

In order to unearth why executives want ERM, you have to ask questions.

Below is a list of sample questions to help get you started…there will certainly be other ones specific to your organization that you can develop.

Before getting into these questions though, you first need to know their level of understanding of ERM. Hopefully they know a little bit since they have decided to utilize ERM practices, but it’s possible their knowledge of said practices is very limited. Once you establish this baseline, you will be better equipped to understand the executives’ motivation.

Question #1 – What is the vision they have for the business and how can ERM help them achieve that vision?

Responses to this question may include growing market share, more streamlined operations, better collaboration across the organization, a smoother running product development cycle, and more. Perhaps they heard from a colleague that adopting ERM helped them accomplish goals much faster or they read an ERM success story in a business journal. This question directly connects with Stephen Covey’s Habit #2 – beginning with the end in mind.

Question #2 – What are they expecting from ERM?

This one is very similar to question #1, but sometimes asking the same question in a little differently can prompt an answer with different details. And this question can be used to pinpoint expectations from the ERM people, not the practices or program.

Question #3 – What do they hope to get out of ERM practices?

This doesn’t necessarily mean a deliverable; instead of a concrete organizational goal like 5% growth in market share, executives may say “improved communication between departments” or “better customer-service ratings” or some other intangible goal.

Like I mentioned earlier, some questions are going to be specific to your organization. However, with the foundation of “beginning with the end in mind” and “seek first to understand, then to be understood,” you can better appreciate executives’ motivation for ERM and therefore pursue a course of action that will deliver the benefits they are seeking.

What is your company’s motivation for adopting ERM and how did this impact your approach?

Inspiration from this post came through a discussion with a fellow risk professional who explained that she needed to know why her company wanted ERM before she could know the right course of action to take. I won’t name this person, but thank you for pushing me to better articulate this important point.

If you have any questions or would like to share your experience, please feel free to leave a comment below or join the conversation on LinkedIn.

Also, if you feel like you’re stuck in this important step or in how to best harness ERM to provide maximum benefit to your organization, reach out to me to discuss your specific situation today.

, , ,

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *

Fill out this field
Fill out this field
Please enter a valid email address.

Menu