Keep ERM approach simple to avoid “frenzy”

When designing and implementing an enterprise risk management (ERM) program, risk managers need to avoid getting caught in a frenzy and approach the undertaking systematically, Paul Brehm, managing director of Guy Carpenter & Companys Instrat Unit, told delegates of the North American Insurance Conference in Tampa, Florida.
According to A.M. Bests ERM framework, smaller companies with a limited scope and stable, traditional lines of business will likely still benefit from a traditional risk management framework, Brehm said, adding that its important for these companies not to get swept up in the frenzy that currently surrounds ERM implementation.
Larger, more complex and volatile companies, on the other hand, he continued, really benefit from ERM framework, he added.
One of the tips Brehm offered for moving towards ERM is to identify and prioritize the top 10 to 15 events posing a risk to the company.
When doing so ask all levels of the organization what they think the top risks are, he suggested. You will get very different answers from the different levels, and some of them you may never have considered.
After youve synthesized those answers into a top 10, begin development of an internal capital model. Start simple, pick one existing problem and then make changes to key processes.