One of the most important realisations in this COVID-19 scenario is that individuals as well enterprises are all exposed to uncertainty. Yes, uncertainty was a part of the system earlier, but COVID-19 has given a new dimension to it. In my view, risk is the outcome that thrives on this uncertainty. Right now, many organisations with their corresponding manpower are in a Catch-22 situation in terms of what lies ahead. The companies do not know how their business models would shape up in the future.
Irrespective of the nature of risk, be it pandemic risk, operational risk, cyber risk; it inter-alia has financial connotations on every organisation. This highlights the importance of knowing about risk.
But would it be the last risk that the companies would be exposed to?
The answer would be a clear NO, as today it is COVID, tomorrow it could be any other health disease, cyber warfare or other catastrophic events.
Another question – Can the companies prepare themselves in combating such kind of risks?
The answer would be YES.
The best example I can quote here is of Wimbledon, one of the most prestigious tennis tournaments. They had countered this risk with insurance, which would give them a sum of $140 million if the event was ever cancelled. The All England Lawn Tennis and Croquet Club (AELTC) identified the risk of cancellation of their event 17 years ago and handled the same in the best possible manner.
So, what can we call this?
The answer is ENTERPRISE RISK MANAGEMENT.
In simple terms, ERM focuses upon identification, measurement and management of multiple categories of risks, which if not handled properly, would affect the operations of the company by putting a dent on the finances. In other words, ERM is a combination of the right diagnosis of the problem and then providing the right medication to solve the issue.
In line with an overall focus on ERM, the Institute of Risk Management’s Level 1 Qualification emphasises upon creating a sound foundation on the principles of ERM that would help every participant in moving up the ladder towards Level 5 Qualification. It would give a holistic view of how to identify and assess risks and most importantly, how to research for risk with the right reporting and communication framework. The latter part would be a USP of this level as the entire framework is based upon live business scenarios and case-lets. IRM’s Level 1 Qualification, an industry-aligned program, would give a clear direction about how to deal with crises and would enhance the risk-oriented decision-making of the participant.
The last question is – Do we really need ERM?
I would answer this in the form of another question – “Is your work/profession/enterprise ready to handle risk and crisis?
I am sure your answer would be NO and thereby, the answer for the first question would be YES for ERM.
IRM’s global qualifications in ERM is the best way to accelerate your career and is relevant across any industry or sector inter-alia including family businesses, start-ups, risk heads, health, pharmaceuticals, law and engineering.
Submitted by: Neeraj Gupta, CFA, CFP, Enterprise Risk Management Exam Coach at the IRM India Affiliate
