Why a formal education in Enterprise Risk Management is the need for every professional and business
Posted: Sep 18, 2020
We live in a volatile, uncertain, complex and ambiguous world. Such conditions persist not only in our daily lives but also in our business processes. Moreover, the recent COVID-19 pandemic has unpleasantly affected the lives of billions of people around the globe from their health to finances. Similarly, risks inherently persist throughout our personal and professional lives, presenting the combinations of the probabilities of multiple events and their consequences. The remedy to the latter revolves around tapping into the Enterprise Risk Management (ERM) framework by identifying, assessing and developing sound courses of action to mitigate the impact of such risks. In this article, I will review the significance of formal education in ERM for every leader and professional in today’s uncertain environment.
- Expecting the Unexpected
COVID-19, like the dot-com bubble burst and the 2008 financial crisis, has left business leaders and their workforce anxious with uncertainty. The aftermath of such impending events in the modern era combined with a data-driven world has not only represented a paradigm shift for the adaptation and understanding of an enterprise wide risk management by corporations, but also the demand for the requisite skills required to implement it into practice. Therefore, it is essential that professionals and aspiring strategic leaders weigh the prospects of a formal education in ERM which can enable them to enter the realm of enhanced decision making, maximising value, reducing costs, mitigating risks and building sustainable businesses to win the war that is yet to begin.# A profession in demand
Multiple threats juxtaposed to organisations have driven the human resource demand for risk management. Lately, COVID-19 has been a wake-up call for many organisations in India, where such threats have intensified, ranging from severe supply chain disruptions to a reported 260% spike in cyber-attacks during the lockdown (as quoted in Business Line, 2020) and of course, a tidal wave of NPAs. Furthermore, a risk culture has arisen, where the global risk consultancy market has grown year by year and was estimated by Consultancy.org (2018) to be USD 70bn in 2018 itself. An essential demand for this profession, combined with a high pay scale, has made risk management a hot job.
Moreover, if you firmly believe in preventing domino-like consequences at the workplace and attaining a lasting business which empirically resonates with each leader and professional, an education in ERM is an excellent way to kick-start your career.
- Outsmarting your own biases
An education in Risk Management perhaps reshapes thinking from a transformational lens, by encouraging systematic, analytical and fact-based thinking. It allows the human brain to navigate into pessimistic scenarios and propel favourable outcomes. So, are you ready to be introspective and improve your decision making?
- A refined organisational structure
Business leaders might often discount them, which eventually in time, either manifolds the problem itself or results in loss of an opportunity. Though rule-based risk measures are a thing of the past, both risks and opportunities remain hidden in a bigger picture and require sound co-operation between leaders and employees.
Firstly, a formal education in risk management helps one develop a deeper understanding of harnessing inflexion points by identifying both risks and opportunities. Similarly, Harvard Business Review (2012) mandates that it enables the breakdown of information-silos in an organisation, avoiding compartmentalisation of rich information by communicating effectively. Finally, by encouraging an integrative approach, it enables prompt action to treat or manage risk and embrace opportunities.
- By Ali Rana
Member - Student Risk Committee at the Institute of Risk Management - India Chapter. I have keen interest in enterprise risk management research.