Business Map to Workers Comp In Enterprise Risk Management

Once a company is successfully able to implement the foundation of their Enterprise Risk Management program, the attention soon shifts to having an effective map that allows important connections to be made.

 

Almost all companies have organizational charts. Most companies, however, do not have a holistic view that outlines business processes, relationships and resources and how it all fits together. In short, a map that uses technology to support meeting organizational objectives.

 

Maps give options and technology provides insight that allows getting places quicker and more efficiently. As you are leaving work on a Friday at 5 PM it is certainly helpful to know what alternative routes are available. When your GPS takes you a different route because it can identify bottlenecks due to an accident, it just gave you another advantage.

 

Organizations are complex. They involve things like business processes, resources, people, policies, relationships, physical assets, applications and data repositories in the midst of dealing with risk, performance and readiness issues. When these things are captured and aligned in business silos it makes your commute (business objective) from point A to B even more challenging.

 

Business maps, unlike organizational charts, take into consideration the complete picture with a purpose, by design, to efficiently get you somewhere.

 

 

Making the Connections

 

No one knows everything in your organization. There is too much happening and it is constantly changing. To make good decisions, the goal is to find the critical paths, priority and resources that need to be involved.

 

Start by organizing by resource rather than by use or department. Once the resources are organized and defined, it makes it much easier to establish important relationships. For example, if your resources are defined and you use your business map to draw the lines/make connections between a “risk” that affects 3 different business processes in your organization and turn the solution into a collaborative vs. silo’d effort, you made progress.

 

Forward thinking companies take advantage of technology that allows important connections to be made.

 

 

A Natural Starting Point

 

As noted by Michael Stack, a principle at AMAXX, workers’ compensation takes a village. When you have and need a village working together, a map is essential. In this very specialized business process area, you are traveling through some very complex neighborhoods and any wrong turn can be costly.

 

Wrong turns such as poor communication and delayed actions translate into missed opportunities.

 

How the processes, relationships and resources tie together in workers’ compensation is a system/map that works best when it is defined in a way that is transparent to the team involved.

 

When a holistic picture is concisely captured and communicated, it makes it much easier for stakeholders to contribute, provide support and make connections that translates into continuous improvement of your program.

 

Capturing the collaborative efforts of a village takes a clear map in the workers’ compensation space. For companies who have not made the leap to Enterprise Risk Management (ERM), this area becomes a perfect landing spot.

 

Applying ERM concepts to workers’ compensation programs allows organizations to demonstrate success and milestones that are transferable and build momentum to a broader ERM initiative.

 

 

Author Mark Bennett, Founder of Risk Innovation Group (RIG), is dedicated to helping large employers face the complexities of risk through innovative Enterprise Risk Management (ERM) practices. ERM programs don’t just help large employers manage business risks more effectively; a well-developed ERM program can protect and create value as well as improve business performance and generate a strong competitive advantage.  Contact: m.bennett@riskinnovationgroup.com

Piece Workers’ Comp Into the Enterprise Risk Puzzle

The term risk takes on a new meaning to forward thinking organizations. As noted by a leading Enterprise Risk Management software provider, Logic Manager, it is a Risk Based Approach to Business.

 

Risk is the overarching theme across all business areas. It resides in operations, shared services such as IT, HR, finance and other dimensions including, compliance, geographic regions and strategic initiatives to name a few. In addition to these risks, executives also face the risk of governance efficiency, things such as silo’d activity, scattered information, misalignment of priorities and unknown relationships that have a direct effect on the bottom line.

 

As companies get larger the challenges are real and there are many pieces to the puzzle. In fact, it appears so complex that some companies never make it to the point they start pulling the most important pieces together. Like a deer in the headlight they stand motionless doing what has always been done and can’t get started making valuable connections that have a bottom line impact.

 

 

Putting the Puzzle Together

 

How do you get started? In short you count the pieces, do the edges and look for the connections.

 

Count the Pieces

 

Did you ever do the hard work on a puzzle only to find that many of the pieces were missing. The starting point is pretty straight forward. Identify the pieces you are dealing with. In most organizations the pieces are known but not clearly defined.

 

 

Do the Edges

 

Start with the low hanging fruit. In a complex puzzle you go straight to the edges. It takes an overwhelming amount of pieces down to something you can manage. Once it gets started, there is still hard work but it makes it easier to pull together. Begin complex puzzles/ business initiatives in areas that can be used as a foundation to pilot and demonstrate repeatable processes.

 

 

Look for the Connections

 

As you are shifting through the many remaining pieces, the colors and shapes become very important. Build your foundations on taxonomy (systematic classification) that can help identify and take advantage of natural connections that do not normally get made.

 

Organizations may have the best people, resources and intentions to move initiatives forward, but if they can’t find a logical starting point, it all breaks down and the status quo never turns into a completed puzzle. A risk based approach to business should not take longer than 6 months to get off the ground. In fact, if the puzzle is mapped out correctly, significant value can be demonstrated in 90 days.

 

 

Author Mark Bennett, Founder of Risk Innovation Group (RIG), is dedicated to helping large employers face the complexities of risk through innovative Enterprise Risk Management (ERM) practices. ERM programs don’t just help large employers manage business risks more effectively; a well-developed ERM program can protect and create value as well as improve business performance and generate a strong competitive advantage.  Contact: m.bennett@riskinnovationgroup.com

The Enterprise Risk Management Plan

risk-innovationCollecting and prioritizing risk data is only valuable if your organization has a way to transition this knowledge into action. Many companies struggle to go to the next step of making their Enterprise Risk Management (ERM) programs actionable.

 

ERM drives your biggest risk into plans, ones that align with and support your strategic goals. Plans are assigned an owner and provided a repeatable process that insures root cause risks that make up the plan have controls, the controls have owners and the activities that support controls are clear so they can be effectively implemented and monitored.

 

Monitoring of controls, effective reporting on progress and establishing relationships that allow for efficiencies among plans and other important business processes are what drives action.

 

 

Business Continuity & Continuous Improvement

 

Some ERM plans have a limited scope for a specific purpose and others are on-going. On-going plans address an important aspect of your business that requires continuous focus. These on-going plans are the organizations opportunity for business continuity and continuous improvement.

 

ERM plans provide formal documentation on what is currently happening; who owns the activity that is taking place and supporting details on the activities. The objective is to not lose any momentum during times of disruption.

 

Continuous improvement works best when everyone is in the know and able to contribute. Formalized ERM plans give both the birds-eye view and details for all stakeholders involved to enable them to effectively review and provide their perspective. Collective Risk Team input and participation is what drives collaborative efforts and best use of available resources.

 

 

Action is Everything

 

Two questions drive to the core of ERM – #1 What is the value of your organization and #2 What could kill that value. Foundational to ERM is a risk assessment process that identifies risk and missed opportunities that could kill the value.

 

There is no progress if the identified risks and opportunities do not transition into plans. The ERM Plan is the consistent and repeatable process to make what is most important, actionable.

 

  

Repeatable Process

 

Best practice plans force accountability and supports plan owners meeting their objectives. They include clear and concise descriptions on purpose, effective ranking displayed through heat maps and a summary of controls attached to each risk. They also include reasoning for the scoring that takes place, feedback on what could go wrong as well as details on what actions are required.

 

 

Apples to Apples

 

When organizations have multiple plans it can be challenging to determine which plan/which focus is most important at any given time.

 

Scoring on Impact, Likelihood and Assurance feed from each risk within each plan and aggregate up to both Inherent and Residual Indexes which allow for educated decisions on resources both among and within plans.

 

 

Author Mark Bennett, Founder of Risk Innovation Group (RIG), is dedicated to helping large employers face the complexities of risk through innovative Enterprise Risk Management (ERM) practices. ERM programs don’t just help large employers manage business risks more effectively; a well-developed ERM program can protect and create value as well as improve business performance and generate a strong competitive advantage.  Contact: m.bennett@riskinnovationgroup.com

Supporting The CFO In Enterprise Risk Management

risk-innovationThe CFO is the most qualified to provide CEO and board operational insight. In most business environments, silos are pronounced and organizational noise is loud. Obtaining and providing a transparent perspective can be challenging.

 

In an ERM platform, process owners perform risk assessment in a standardized and repeatable method that aggregates up to the CFO. The Chief Risk Officer or Risk Manager is responsible to provide the framework and to ensure assessments are on-going, complete (strategic &  operational) and based on the root causes of the company’s business risk.

 

A centralized risk repository provides feedback on risk, across functions  and levels, and is qualified and quantified and easily prioritized so the CFO can provide one comprehensive picture to the board.

 

Operational insight is not something a CFO should be tracking. A structured process ensures current and emerging risk is being evaluated and assessed on a day- to- day basis.

 

 

Is there focus on the silos?

 

All organizations have silos. It is challenging to make connections across silos and difficult to effectively escalate even the most obvious concerns. Data is collected in different places; each area only has a piece of the problem and typically, activities and the conclusions are confined in  silos.

 

What efforts, resources and thoughts are put into breaking down silos? The core to ERM is addressing silos so that valuable resources are not wasted and cross-functional efficiencies are not lost.

 

 

Hazard vs. Business Risk

 

Traditional risk management deals with hazard-based risk. As hazards are negative, the goal is to avoid or eliminate risk.

 

There is a “seize the opportunity” component to business risk. All business decisions involve risk; they shift efforts and resources. The upside to these decisions is gain and the downside, loss.

 

ERM applies risk management logic to business decisions so that efforts and resources shift to an organization’s most important needs and key opportunities are not lost.

 

 

Is organizational noise good or bad?

 

It depends – random and unsubstantiated comments can undermine well thought-out plans.

 

Opportunity to voice opinions is what drives a healthy culture. Framework that encourages feedback through structure that requires thinking, processing and presenting like business owners sets the stage for a collaborative and innovative environment.

 

 

Author Mark Bennett, Founder of Risk Innovation Group (RIG), is dedicated to helping large employers face the complexities of risk through innovative Enterprise Risk Management (ERM) practices. ERM programs don’t just help large employers manage business risks more effectively; a well-developed ERM program can protect and create value as well as improve business performance and generate a strong competitive advantage.  Contact: m.bennett@riskinnovationgroup.com

 

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