Have you attended a presentation on enterprise risk management (ERM) and left needing headache medication? I recently attended an ERM presentation with a business associate who has been in the insurance industry since JFK was President; about half-way through, he looked at me and said, “Do you know what they are talking about?” I couldn’t guarantee him that I did – and the diagram used to depict the presenter’s concept of ERM was positively mind-boggling. Probably the most useful aspect of the presentation was its ability to solidify my resolve to demystify enterprise risk management for my clients.

What, exactly, is enterprise risk management? ERM is a powerful tool integrating: 1) Risk; 2) Contingency; and 3) Business resiliency planning. Definitions of ERM and the generally awful diagrams used to describe it differ widely, but I like to keep things simple.

Look at enterprise risk management like a toolbox full of important tools – all are necessary to ensure that any business or organization maintains a solid infrastructure and has easily implementable plans to deal with whatever emergency or crisis comes along. Each tool relates to every other tool; and no tool is more important than any other. All of them have to be in place and in operational condition for the organization to have an effective Enterprise Risk Management system. That’s it!

Frankly, the mind-numbing diagrams and convoluted discussions have served to obliterate the benefits of ERM. Enterprise risk management is an essential means of protecting your business because:

  • ERM establishes a system and ongoing practice for assessing – and dealing with - risk areas within your organization.
  • ERM planning includes a solid crisis management component. When an organization is dealing with a disaster or crisis, having a plan in place is vital to managing the crisis in a manner that inspires confidence. 
  • ERM helps you to identify important systems that must be in place and operational to resume operations in a timely fashion following a disaster or crisis. 
  • ERM planning is essential in helping the entire organization understand how to manage risks related to fuzzy (but crucial) issues such as brand and reputation. When clients/customers no longer have confidence in your organization, they will go elsewhere - immediately. If you don’t believe this, consider how fast Arthur Andersen and ACORN imploded. 
  • A good ERM plan is worth its weight in gold for you as an insurance professional. As you know, the more documentation you can present to an underwriter, the better able you are to negotiate higher limits and broader coverage for your client – and at competitive premiums.


In the two-part enterprise risk management Webinar for the Insurance Journal Academy of Insurance, I will provide participants with an overview of enterprise risk management as a streamlined, efficient method for managing risk, preparing for business interruptions, managing crises confidently and resuming normal operations in a timely manner. The webinar series is structured to present a user-friendly discussion of the nature of enterprise risk management and the approach for implementing ERM in an organization. Yes, there will be simple diagrams – and a hands-on methodology. You’ll come away with a vital system in place – no aspirin needed!