In some ways, Enterprise Risk Management is just about the basics of any business, but as the nature of business and the range of what activities has increased, so have the difficulties of bringing all this together. A recent survey by Thomson Reuters showed that ERM programs have managed to drive considerable improvements in shareholder value even though there has been a lack of support and resources given to them:

Source & Copyright©2016 - Thomson Reuters 

Thomson Reuters believe that the questions now are: 

• Just how much value would an ERM programme drive if it was properly resourced and given time and attention it needs within organisations?
• If these programs can deliver so much based on such a thin gruel, how much better could they perform with the team that had proper metrics and an appropriate technology platform?
• How much better would the management information be that boards and senior executives receive?

This is how technology platform providers think, however first comes commonsense as Magnus Attoff shows.

ERM common sense

Magnus Attoff, head of financial risk management at Ericsson advises:

• In risk measurement, don't spend too much time trying to get it perfect down to the last decimal.
• Keep an open mind about risk and be sensitive and reactive to changes in markets and operations. Remember nothing is stable.
• Look at your company's P&L and know where the revenue comes from. Then you can make sure you're measuring risk in the right areas.
• In terms of your skill set, you need to understand the different types of risk and how different instruments work.
• You also need to work with financial controlling to look at the relationship between risk and results.
• Having experience in lots of different areas is an advantage because it enables you to see that there is no right and if there's no right, you don't have to worry about being wrong.

ERM technology platforms

There are many different technology solutions ranging from the Enterprise Risk Manager from Thomson Reuters which is an enterprise wide solution connecting the whole organisation to TMS solutions which incorporate ERM as well as the typical Treasury functionality, e.g. OpenLink.

Enterprise Risk Manager 

Thomson Reuters claim that their Enterprise Risk Manager enables organizations to establish a framework for risk based on their risk appetite. The solution captures information such as incidents, indicators, assessment responses and scenario analysis data. It provides risk managers with the insight to analyze risk through the lenses of their organization’s various structures and reporting lines – using a powerful search capability – so that both the cause and effect of “a risk” can be fully understood. The platform will show risks by organisation, by legal entities or by organisations, see below:

Source & Copyright©2016 - Thomson Reuters 

OpenLink 

OpenLink’s platform brings together commodity and Treasury CRM solutions. The latest release of the corporate treasury solution integrates into one platform: commodity management, treasury management and ERM across the supply chain. The system looks at the risks in materials/commodities across the supply chain, and the inherent currency/fracture exposures of those commodities, see figure below:

Source & Copyright©2016 - OpenLink  

Understanding and acting on ERM objectives

The Thomson Reuters survey showed that many organisations do not fully understand and act on their ERM objectives:

Source & Copyright©2016 - Thomson Reuters

This shows the vital role that the ERM technology platforms can play in bringing together and publicising exactly what the ERM risks are.

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CTMfile take: The ERM technology platforms are getting better, the days when ERM reports are looked at regularly and are part of the Board input is coming. How does your TMS cope with ERM reporting?