More and more organizations are adopting Enterprise Risk Management (ERM) frameworks to respond to regulatory pressures. And with good reason.
In their 2014 Report on the Current State of Enterprise Risk Management researchers Mark Beasley, Bruce Branson, and Bonnie Hancock found that nearly two-thirds of organizations surveyed admitted they were caught off guard by an operational surprise “somewhat” to “extensively” in the preceding five years. And in a 2014 survey of nearly 300 insurance organizations by Wolters Kluwer Financial, two-thirds of the respondents rated "maintaining compliance with changing regulations" as one of their most pressing regulatory and risk management concerns.
It's the battle we're all in - the need to mitigate risk and maintain profitable growth in the face of regulatory changes. Maybe you're facing a steady stream of new rules. For example, the US Securities and Exchange Commission issued 20 final rules in 2013 alone. Or perhaps you're preparing for a larger change, such as complying with the Solvency II insurance regulation directives in the EU, or the Affordable Care Act in the US.
Amongst the myriad challenges facing an organization (assessing risk culture, integrating technology systems, aligning and integrating risk management into strategic planning), there lies "the human element". In the end, the success or failure of a risk management framework, like any business transformation, comes down to people.
If you have new processes to adopt, you need a workforce that can adapt - - a workforce that makes informed decisions, has the right information in the right format at the right time, and then absorbs and acts upon urgent information.
SAP's solutions for access control, process control, and fraud management provide an excellent framework for successful risk management. And SAP has recently introduced SAP Communication Center by Ancile (SCC) as one way to address the human element. When used in combination with SAP's risk management solutions, SCC enables you to align your workforce and your ecosystem in a single compliance-driven framework.
SAP Communication Center provides urgent information to employees via mini-lessons that focus on one or two key concepts. Each message you deliver to your team with SCC includes critical information along with a quick knowledge check to ensure the recipient understands the information.
For example, consider banks who want to comply with the latest global regulatory standard Basel III. To meet this standard, banks must comply with specific monitoring and public disclosure standards. On the ecosystem side, the real-time, high-speed reporting and risk management is available from SAP's Liquidity Risk Management (LRM) Architecture. But, in addition to the LRM application framework, you'll also need a workforce that's ready to implement the Basel III disclosure requirements.
By creating a simple mini-lesson using SAP Communication Center, a risk manager can quickly share just enough information to the right people to ensure that they know what to do. Each team member receives the message in their desktop or mobile browser, or via the SCC iPhone app.
SAP Communication Center also includes reports that give the risk manager much-needed visibility into how well their team is absorbing the information.
Given the pace and complexity of regulatory changes and the need for an effective enterprise-wide approach to risk oversight, learning snacks may be exactly what workers and business leaders need in order to adapt. Beasley, Branson, and Hancock found that most organizations haven't provided training and guidance on risk management in the past two years for senior executives or key business unit leaders.
How do you deal with the human element in your ERM approach? Do your workers know what the organization expects of them regarding risk activities? What support and incentives do you provide to enable and encourage the desired behaviors needed for effective risk management?
I encourage you to share your experiences, views, and insights by replying to my blog post here on SCN.
