DavidCompanies have to deal with any number of different expenses just to keep their organizations open. Electricity and rent are among the most basic. Add to this other utilities as well as wages and benefits to get an idea of just how expensive it really is to operate a medium-to-large scale company. Enterprise risk management (ERM) is often thought of as yet another cost of doing business, which is why you might have overlooked it.
Contrary to popular belief, however, implementing a solid ERM plan is actually a great way to save money. No matter the business type or size, having an ERM plan will be beneficial. Everyone who opens or takes over an existing business is accepting at least some level of risk. It can be hard to see just how risky a particular venture is until something bad finally happens. Professional risk management specialists will analyze a situation and figure out the odds of any particular situation occurring. This makes the ERM field at least somewhat related to actuarial science, though insurance actuaries are generally focused on pure probabilistic models.
ERM professionals take a more integrated approach that looks at an organization from a holistic point of view. Companies and non-profit groups alike can take advantage of this kind of thinking. For that matter, even public sector authorities that are answerable to nobody besides taxpayers and regulators have hired ERM specialists to figure out what kind of potential risks they’re looking at.
Once someone has a clear picture of what kind of issues they might run into, they’ll be in a much better position to prepare for them. If you knew that your organization was going to face a certain disaster in just six months, then you’d be able to purchase the necessary replacement products to recover from it before this happens. While nobody can ever be that sure of any specific malady, there’s no reason why a good digital analytics platform can’t tell you the odds of a problem happening.
Actionable data is something that most companies can never seem to get enough of. Raw probabilities aren’t always something that you can plan for, since they only tell you the percent chance of something happening. This makes preparing for the future little more than looking at the financial equivalent of a weather report. Stronger ERM analytics will help you identify long-term trends and see whether or not you have the right survival strategies to keep your organization running smoothly.
As soon as you have a map for the future, you’ll be in a much better position to predict future costs and know where you need to put your money. That means you won’t have to stock up nearly as much on things for disasters that your group isn’t at risk for. If something does happen, then you’ll be in a much better position to recover from it without making claims that end up sending your insurance premiums skyrocketing. Rather than looking at the upfront costs associated with implementing an ERM platform as expenses, it’s a much better idea to see them as an investment.