Tales of the Unexpected

Can enterprise risk management programs deliver bottom-line value?

ERM Rescue Remedy

Frans Eelkman Rooda, CFO of OPG Group, reckons that the ERM programme at the Dutch mid-cap healthcare company is like most others — unfinished. In the preliminary findings of a survey to be published later this year, Deloitte found that most ERM programmes are less than two years old, and only around a fifth of 71 European companies polled feel their programmes are fully operational.

Not long after OPG’s ERM launch three years ago, Rooda sensed that enthusiasm for enterprise-wide risk management was already waning. “Like any company wanting to increase its emphasis on controls over the past few years, fatigue was starting to set in,” he says. “I was starting to get an ‘oh no, not again’ type of reaction.” That was a worry given that a key component of OPG’s programme depended on regular self-assessment exercises run by each business unit, and without the entire company’s buy-in, the programme would be dead in the water.

So Rooda and his risk manager explored how other companies dealt with this problem. “We wondered whether what we were seeing internally was unique to us,” recalls Rooda. After getting in touch with other medium-sized Dutch companies, “we began finding patterns,” he says.

And those patterns were also reflected in an internal benchmarking exercise of two OPG business units — one, with annual sales of €22m and 190 employees, was not happy with its ERM rollout, while the other, with annual net sales of €90m and 175 employees, was. Why the difference? The scope of the project was one reason. The unhappy unit had a broad range of projects, perhaps too broad, as it was plagued by delays and over-complexity. The other unit selected a narrower range of projects, each delivered to a tight implementation schedule.

Another striking difference was leadership. While the ERM programme at the unsuccessful unit was run by finance, the other unit involved the entire management team. “It really is a shared responsibility, and leaving it to either finance staff or to line management is not enough,” says Rooda.

Although the primary responsibility for ERM usually lies with CFOs — as noted a recent survey by Treasury & Risk magazine of more than 200 executives — broader sharing of leadership might be just what ailing ERM projects need.

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