Insights

Where Enterprise Risk Management Comes Into Play

 

Where Enterprise Risk Management Comes Into Play


Mar 01, 2019
Financial Institutions

Super Bowl week used to be one of my favorite weeks of the year. Not because of the great football game with the clever commercials. Or the buffalo wings, chili or other cold-weather comfort food that added to the enjoyment of watching the big event. Super Bowl was the signal of the end of my football season. You see I married a football coach, and I had two sons who played football through college. For nearly 30 years, I endured the lengthy football season with a combination of anticipation and anxiety as each game week came and went with, hopefully, a mark in the win column and, most importantly, no injuries. The Super Bowl marked the end of that six-month period every year that was tainted with a constant worry about the unknown. The Super Bowl meant that I would have six months of being football free!

All of that came to an end this past year. My boys have grown into men; both have graduated from college and thankfully are no longer playing football. And the coach stopped coaching a few years ago to watch his own sons play. While I longed for many years to have a fall that did not include 10-12 football games per child/husband, this year I found myself missing it. If I’m honest, I was completely lost without it. While I did enjoy my apple-picking excursion, it was no replacement for the excitement that had defined my weekends in the fall for the last 30 years. That said, I did take time to reflect on the whole experience and what had I learned about strategy, teamwork and preparing for risks both known and unknown.

First and foremost, you cannot be successful in football without a clear mission and a strategy. While the mission remains the same — to be the champion of the world (I defy you to find a football team without that mission) — the strategy must change every week to adapt to a new opponent. Risks, both known and unknown, need to be identified and planned for, but sometimes the game plan must be completely reworked right in the middle of the game. Finally, you need the right players, all with the same goal in mind, all acutely aware of the risks involved and all with the capacity to get the job done (ask the Chicago Bears). A successful game plan is centered around the capabilities and capacity of the team, not the capability and capacity of any one player, since we all know what happens when “that one” player gets hurt.

While the frequency of change may not be weekly for financial institutions, it certainly is much quicker these days than many bankers are used to or typically plan for, and that’s where enterprise risk management (ERM) comes into play. Each institution has a mission and a vision for the future, and each typically has a strategy to get there. The key is in being prepared with the right game plan for the chosen strategy while remaining nimble enough to identify and adjust for the risks to that strategy. Having the foresight to tweak or change the strategy at “halftime” can make all the difference in the outcome of the game — or the success of the institution. This holistic approach (ERM) of assessing the capabilities and capacity of the team (institution) will ensure that one player (silo) does not lose the game. 

Author(s)

Karen Mitchell
Karen A. Mitchell
Senior Manager, Risk Advisory Services
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