Application of Enterprise Risk Management
Enterprise Risk Management is a framework guided by the Committee of Sponsoring Organizations of the Treadway Commission guidelines that enables organizations to systematically identify, characterize and manage key risks to achieving strategic goals. The concept in general takes the position that stable business performance or growth is often interrupted by surprise negative events. In some cases these surprises can cause significant operational disruption and distraction for some time and may impact the ability to invest in growth opportunities since resources are directed to minimizing loss. In complex global business the risks that often have the most significant impact are known somewhere in the organization but are not raised adequately to inform decisions. An ERM process is an enabler of transparency, risk awareness and signal detection and cross functional and cross silo dialogue on the risk and the implications. Organizations apply these approaches in different ways, however some critical elements of implementation include - building ERM into routine business process, senior leadership and Board endorsement, measurement to drive risk informed decisions, disciplined application of standards. In the pharmaceutical industry there are well known inherent risks: long cycle time, product development attrition rates, product safety and quality, product supply sustainability, etc. These risks and others that may be more unique to particular organizations require quality risk assessments that identify the particular scenarios of interest. These quality risk assessments enable teams of experts to characterize a particular risk with clarity, fully understanding the implications across a number of key domains - does the risk have near term or long term financial impact? Is there impact to customer, patients, employee? Is there impact that can effect the reputation of a brand, a market, the company? The application of RM techniques and tools will be explored in the business setting.
Laurie F. Smaldone, Bristol-Myers Squibb Company