Companies usually find themselves in one of four quadrants of the ERM/Business Success matrix:

1. A company has proper risk controls in place and is successful/profitable
2. A company does not have proper risk controls in place and is successful/profitable
3. A company has proper risk controls in place and is unsuccessful/unprofitable
4. A company does not have proper risk controls in place and is unsuccessful/unprofitable

The Success Paradox

The term “Success Paradox” has been used to refer, among other things, to individuals that are economically successful not being as happy as those less economically well-off, to the increased vulnerability of developed countries to diseases such as measles, and to the concept that an enterprise, such as a poverty NGO, can put itself out of business if it is successful.

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Technorati Tags: business success, construction risk control, Construction Risk Management, Enterprise Risk Management, luck in business, Risk, Risk management, success paradox

MyRiskControl’s talented team of developers and advisors is proud to announce the start of closed beta testing for our patent pending Enterprise Risk Management system. We’re inviting a small initial group of companies in to help us test MyRiskControl before our official launch.

MyRiskControl is a provider of Enterprise Risk Management (ERM). Contractors of all sizes can use our Enterprise Risk Management system to implement practical ERM solutions. This is provided faster and at a fraction of what it would cost to hire a full time person.  We focus on providing real solutions and avoid burdensome general explanation binders. We understand that Risk Management extends well beyond insurance. Our team of construction experts are ready to provide live help when you need it. Live help is exactly what it means, a person to discuss your unique company when you want it.

If you’re interested in joining the beta, please send an email to beta@myriskcontrol.com with your name, email, company, and phone number and we’ll send you subscription information as soon as we’re ready for more beta testers. If you are one of those helping us to test the product - welcome, and thank you. We will be working hard to make sure your MyRiskControl is a great one.

We look forward to helping you Build Smart!

Technorati Tags: beta, launch

Effective Enterprise Risk Management is not rocket science.  In fact, most risk controls turn out to be very simple policies or procedures that will prevent adverse shocks to a business.  Oftentimes, though, it’s hard to cut right to the core of a problem and separate the effects from the root cause.  In Construction Positions and Responsibilities, one of our advisers discusses drilling down to determine the root cause for the difficulty a client was experiencing trying to grow its business.

Technorati Tags: Risk management

The topic of Enterprise Risk Management can seem quite confusing, especially since there is a good deal of misinformation floating around.  In “The Top 10 Enterprise Risk-Management Myths,” Gordon Burnes of NewsFactor.com discusses some of the most common myths of Enterprise Risk Management.  The article is a good read for those interested in ERM, although we should point out that it is (like most information on ERM) still heavily IT/Financial focused.  A couple of the myths speak directly to the premise behind MyRiskControl.com:

Myth Number 7: You Can Manage Risk Only from the Center

No one is likely to argue that strong, central risk management is a bad thing. Unfortunately, many organizations make the mistake of investing only in a centralized function because it’s too difficult to federate, and they don’t know how to push risk management to lower levels of responsibility in the organization. It’s a classic issue of consistency vs. quality of information.

But, accurate information lies at the business line level. Organizations must augment their centralized risk management efforts with localized, distributed data, and the only way to reliably and cost-effectively do that is to invest in automated technology solutions.

Along this line of thinking, he continues:

ERM needs to be deployed bottom-up so that business managers are the first-line managers of risk, embedding enterprise risk management within the day-to-day business processes of the firm. They must understand the risk/reward trade-offs involved in their own decision-making. Risk management should create a bias for action, surfacing problems as they arise and empowering the entire organization to be risk managers.

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Technorati Tags: Business process, Enterprise Risk Management, Risk management

PricewaterhouseCoopers put out an interesting study entitled “‘Does ERM Matter? Enterprise Risk Management in the Insurance Industry 2008.’”  In commenting on the article, Continuity Central discusses some of the difficulty found in implementing Enterprise Risk Management within financial institutions:

“Against the background of an ever tougher risk environment and growing demands from investors, regulators and rating agencies, PricewaterhouseCoopers says that many insurers and other financial services organisations are asking questions about the effectiveness of enterprise risk management and its ability to deliver a return on investment or meet the expectations of stakeholders.”

The article is worth reading.  One of the key points made is:

“…the study found that enterprise risk management is, in many cases, neither relevant to nor clearly understood by business teams. It is not fully embedded into strategic decisions and its integration into day-to-day decision making and frontline risk taking within many insurance companies remains limited, potentially undermining its ability to deal with a more complex risk environment and more exacting stakeholder expectations”

This article mainly addresses ERM within financial institutions.  These companies have a very real need for ERM, especially with a broad range of exposures to interest rates, natural disasters, and general economic turmoil.

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Technorati Tags: Business, Decision making, Enterprise Risk Management, Financial Services, Insurance, Risk, Risk management