Posted by John O'Rourke
Happy St. Patrick's Day! In Irish folklore, a leprechaun is a type of fairy usually depicted as a little bearded man, wearing a coat and hat, who partakes in mischief.
They are solitary creatures who spend their time making and mending shoes and have a hidden pot of gold at the end of the rainbow. If captured by a human, the leprechaun has the magical power to grant three wishes in exchange for their freedom. So if you do catch one, you could inherit some Irish luck and avoid the chance of your company having problems. But chances of this happening are low, so you are probably better off applying enterprise risk management techniques to your business. Managing enterprise risks is a continual balance between reaching out for opportunities while mitigating threats to the organization.
Achieving the Right Balance
Some organizations steer too far toward reaching for opportunities, putting financial stability at risk. Others go the other way, retreating so far from real and perceived threats as to cripple the organization's ability to grow and increase revenue streams. Where is that coveted middle ground? How can your organization accept a healthy level of risk and seize those opportunities, without allowing the threats to overtake the company? Enterprise risk management (ERM), a close cousin to enterprise performance management (EPM), includes the methods and processes used by organizations to manage risks and seize opportunities related to the achievement of their objectives. ERM provides a framework for risk management, which typically involves identifying particular events or circumstances relevant to the organization's objectives (risks and opportunities), assessing them in terms of likelihood and magnitude of impact, determining a response strategy, and monitoring progress. By identifying and proactively addressing risks and opportunities, business enterprises protect and create value for their stakeholders, including owners, employees, customers, regulators, and society overall.