Risk is an inevitable part of the business process. There are situations when you cannot overlook the risk prospect, and it becomes essential to integrate risks in the business. However, it is important to take calculated risks by analyzing the business situation thoroughly. There are various risk management processes that focus on research and technological aid. In the current business world, it is vital to include strategic value in the risk management procedure to align your plans per the firm policies. In her article for Risk Management Magazine, Hillary Tuttle shares how a strategic framework benefits risk management plans.
The Current Situation of the Enterprise Risk Management Process
The enterprise risk management (ERM) process is steadily soaring. According to a study initiated by the American Institute of CPAs and North Carolina State University, 33% of firms have incorporated the ERM process. However, business experts believe that there is a good possibility that the numbers will rise higher in the future. 20% of the respondents believe that their organization has a highly functional strategic framework that supports their risk plan. Many respondents also mention that companies place too much focus on the financial components and do not implement risk management processes in other areas of the business.
The Significance of a Strategic Vision
Business management relies significantly on the strategic framework of the corporation. It helps an enterprise plan its process and get a clear understanding of the resources it would need to execute a plan. Furthermore, incorporating strategic value helps firms overcome business uncertainties and confusion.
According to Mark Beasley, director of the ERM initiative at NC State, strategic value enhances the quality of business insights that automatically optimize business productivity. He further adds, “It is our hope that the ongoing uncertainties and rapidly changing business environment will convince more executives of the strategic importance of having rich insights about risks facing the organization as they make key strategic decisions.”
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