The pandemic has changed the way we view and manage risks. The flip side is that it has created a greater demand for a robust enterprise risk management (ERM) ecosystem to help organisations address emerging crises through proactive, data-based integrated solutions. It is important for professionals to be risk-intelligent and capable of critical analysis to understand and map risks, and devise mitigation strategies. For this, we must start early and provide holistic risk management training.
The best way to ensure that risk awareness and compliance become a fundamental part of business behaviour across sectors is to make ERM part of the syllabus in higher education, particularly in vocational and management education, so that the habit of constantly scanning for and assessing potential threats becomes second nature. For example, there are risk management courses for students after Class XII. Not only do these help develop skills to manage financial risks but also others including cybersecurity, supply chain, branding and others.
Scope
ERM is a holistic approach towards managing an organisation’s risk and opportunity spectrum. Having an embedded ERM system allows companies to act quickly, mitigate threats and maximise opportunities. More importantly, it builds an agile ecosystem where vigilance and adaptability in the face of uncertainties is ingrained.
ERM education requires a cohesive approach with practical experience, as it takes a solution-oriented view where students learn the use of analytical tools to evaluate risk. It provides them insights into the most common areas of organisational threats, including finance, geopolitics, technology, environment, governance, and society. The aim is to transform risk management into an integral part of day-to-day management rather than a periodic exercise.
Value
Professionals with ERM qualifications are invaluable, as they identify, manage, monitor, and mitigate various risks associated with any modern business. Aligning risk policies with business strategy allows organisations to prepare a plan of action for any emerging opportunity, stay alert for any potential fallout, and minimise the impact on business. Beyond that, embedded risk management structures also ensure that organisations stay proactive in identifying an emerging crisis, thereby enabling them to take appropriate, effective and timely action, and creating direct and indirect value for the business.
For students, risk management qualifications can open up rewarding career prospects, as risk managers, analysts, and consultants. After the pandemic, risk managers are closely working with senior management across sectors to evaluate risks and take strategic initiatives to build and strengthen businesses. They often work in various functions, from budgeting to performance management. Competent and qualified specialists with proven expertise have the potential to eventually become Chief Risk Officers (CROs) — a key executive position.
A robust understanding of risk management can not only help predict the next disruption for companies, but can also facilitate the creation of strong organisations that can withstand and even grow in the face of unprecedented events.
Hersh Shah is CEO, Institute of Risk Management - India Affiliate. Jenny Benoy is Researcher, International Trade, Asia Pacific Foundation of Canada
