Enterprise Risk Management Principles Can Help Navigate Risks Triggered by COVID-19

Mark Beasley, professor of accounting and director of the Enterprise Risk Management (ERM) Initiative, spoke at a livestream event hosted by the Raleigh Chamber of Commerce on the impact of COVID-19 (coronavirus) on ERM. Beasley outlined how key concepts from enterprise risk management might provide a framework for organizing how we prioritize and respond to the most critical risks triggered by COVID-19.  

“COVID-19 is highlighting the critical need for an enterprise-wide view of risk,” said Beasley. “Business leaders are able to see how COVID-19 is triggering risks across their organizations and how those risks are interrelated.” 

Beasley highlighted tips for managing risks for the “Here and Now” and for later once COVID-19 is behind us.  

The Here and Now

1. Focus on your people first – employees, customers, suppliers, partners – get them to a place of safety and where they feel some sense of security.
2. Pinpoint your organization’s most critical driver of its business value and identify your most important crown jewel for survivability.
3. Identify the critical people and core processes that are needed to keep your organization functioning at an optimal level.
4. Seek input from several people across the enterprise – don’t try to solve your business challenges without multiple lenses. 
5. Communicate often and frequently.  One of the most valuable aspects of an effective ERM process is that it leads to richer and more robust conversations about risks that might impact a business.

Rebuilding After COVID-19

1. Focus on near-term survivability. Gather high level analysis of the financial impact of your business and how that might affect your ability to financially sustain operations. 
2. Conduct basic cash flow analyses and forecasting to get a high level view of your potential financial damage.
3. Engage in conversations now with key financial players who may be in a position to help patchwork your financial commitments for a short while.  
4. Leverage learnings from this event to build processes that will put your organization in a stronger position when the next unknown crisis appears.  
5. Invest in ERM processes to help you proactively manage risks that might impact your business’s strategic success for long-term survivability.