Two companion reports from IMA® (Institute of Management Accountants) can help accounting and finance professionals develop more effective Enterprise Risk Management (ERM) practices.

The first report, "Enterprise Risk Management: Tools and Techniques for Effective Implementation," is authored by Paul Walker, CPA, Ph.D.; and William G. Shenkir, CPA, Ph.D. It’s addressed to management accounting and finance professionals who serve as strategic business partners with management in the implementation of ERM in their organizations.

In this report, the authors discuss techniques for identifying risks, using examples from company experiences. They describe how once risks are identified, the next step is to determine the root causes or what drives the risks. Also explored: some practical ERM implementation considerations, such as:

  • Infrastructure and maturity models
  • Staging adoption
  • Education and training
  • Technology
  • Aligning corporate culture
  • Building a case for ERM within an organization
  • Return on investment (ROI)

As noted in the report, “Any organization—large or small; public, private, or not-for-profit; U.S.-based or global—that has a stakeholder with expectations for business success can benefit from the tools and techniques provided in this SMA.”

A companion report, authored by the same team and titled “Enterprise Risk Management: Frameworks, Elements, and Integration," provides perspective on ERM’s most effective frameworks and its foundational elements. In it, Walker and Shenkir contend that as organizations grow in complexity and serve global markets, their ERM strategy needs to be integrated and holistic, cutting across siloed operations.

Foundational elements necessary for successful implementation of ERM in an organizational context include:

  • Tone at the top (the importance top management places on effective ERM)
  • Risk management philosophy and appetite (how much risk the company can optimally handle)
  • Integrity and ethical values (uncompromising commitment to integrity and ethical behavior)
  • Culture and ERM (culture is a key to success and must be proactively managed)
  • Scope and infrastructure for ERM (scope should be stated clearly)

Both reports discuss the role of the management accountant as a champion of ERM, helping to resolve conflict between supporters of ERM and traditional risk management approaches.

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