Risk managers need elevated role to implement ERM

Risk managers need to be positioned high enough in their organizations to effect enterprise-wide risk management (ERM) throughout the organizational structure, says a new position paper by the International Federation of Risk and Insurance Management Associations (IFRIMA).
IFRIMA president Sue Meltzer, who also serves as assistant vice president of risk management for Sun Life Financial, says organizations need to recognize the expanded role their risk managers can play in the current “risk aware” environment. “Risk is inevitable in today’s business environment,” she says. “It is time to get risk professionals in charge of mitigating the risks they are trained to identify and thereby leverage opportunities that benefit the whole of the company.”
The position paper offers best practices and guidelines for the role of risk management in organizations. First and foremost, risk management should contribute to the overall business objectives of the organization. And, in today’s world of corporate scandal, a consistent transparent framework for corporate governance is necessary. Thirdly, risk management acts in a mitigation role to protect organizations against shocks, partly through risk transfer.
Meltzer says the best practices are intended to address the wide array of industries and roles risk managers play. “Risk professionals don’t fit into a certain mold,” she explains. “Frankly, that is the intrigue of this profession for many of us. Across different industries, throughout different countries the job description varies tremendously.”
The full set of best practices is at www.ifrima.org.