The current atmosphere of uncertainty isn’t anything new. Given the interconnected nature of businesses across the globe, political transitions and other changes have necessitated an ability to shift and adapt for quite some time.
The role of an entrepreneur is to inspire and lead. To do this as your organization grows and scales, it is essential to create and sustain a strong company culture where managers at every level can align with this vision and see the direct impacts of their contributions on strategic goals.
I founded LogicManager in 2005 to help organizations manage the uncertainty of dynamic business environments and understand the impacts of changes with the good governance structures enterprise risk management (ERM) creates. Successful entrepreneurship requires strong governance to create a high-performing execution environment that supports managers and front-line employees alike. ERM helps entrepreneurs by enabling them and their managers to understand the impacts of systemic risks from their business environment, technologies, people, processes, and relationships.
Strong governance may seem an obvious component of long-term profitability, but it is missing in many organizations as they attempt to sustain their processes, innovation, and values during periods of high growth. As a company scales-up, complexity develops in talent management, security, vendors, customer success, compliance, audits, and contracting areas to name a few. Strong governance is synonymous with strong corporate culture, which is crucial to attracting the best new talent and partners, while creating a rewarding experience for existing employees.
Enterprise risk management’s risk-based approach helps business leaders identify areas of inefficiency, which helps pinpoint time-consuming, manual tasks that can be alleviated with new technologies. This enabling your employees to hold more cross-functional roles that enable them to think critically and spend more time leveraging their unique strengths. Building your teams around complementary strengths, while streamlining inefficient processes, will enable an organization to mentor high-performing all stars who understand how to combine skill sets and accomplish common goals.
How Entrepreneurs can Address Risks in their Innovations
There is a misconception that entrepreneurship is associated with an absence of controls and wild risk taking. Reality is far from this misconception. However, it is true that with every new innovation comes risk.
Not being aware of changing risk profiles, failing to analyze their impact, and not anticipating the likelihood of a risk materializing under controls is negligence. Enterprise risk management can help entrepreneurs avoid negligence by uncovering these connections. ERM does this by providing leaders the objective information they need to measure and manage vulnerabilities stemming from new operations and business strategies.
ERM also helps identify new opportunities that result from changes in the business environment. The agility of entrepreneurs positions their organizations in the best position to quickly identify how a regulatory change or emerging technology creates room for new competitive advantages. Due to their flexibility and ability to predict future trends, these leaders can react by adapting their processes, product, and strategies faster than their competition; reaching their consumer faster.
Setting risk tolerances around goals involving experimentation ensures exposures are monitored and that failure won’t bring the whole house down. Enterprise risk management solutions track performance metrics against these tolerance ranges, which encourages problem solving in periods of uncertainty. These flexible platforms also monitor operational controls with tight reporting parameters and automatic notifications when both uncertainty and impact are high.
Simultaneously assessing, mitigating, and monitoring risks prevents distractions and streamlines the path to goal achievement across all company functions and activities. Creating and sustaining competitive advantages in your business model with enterprise risk management is critical as emerging technologies close the gap on traditionally reliable streams of revenue and differentiated operations. ERM’s connected, risk-based approach is all about establishing a common framework that’s integrated into all roles throughout the company.
This approach to collaboration and preventing surprises became part of our LogicManager’s operations from the start, and continues to connect teams and individuals during our highest periods of growth. This philosophy of proactively identifying opportunities and managing uncertainty then became our brand, and we share a belief that sustained performance is a result of effective risk management. LogicManager is proud to help companies and their customers to manage their reputations, achieve their goals, and prevent surprises.
Entrepreneurship as a career is all about this great desire to learn and continuously improve; for it is the process of learning that is most rewarding. ERM helps entrepreneurs take risks with balanced rewards while maintaining the balance needed to be transparent with ourselves and others. ERM enables us to use methodical reasoning to explain proposals, theories, or plans to pull together all the resources our teammates need to succeed. As entrepreneurs we see in detail what the future might hold, and this detailed picture pulls others forward with us to build better teams, better products, and a better world.
About the Author
Steven Minsky is the CEO of LogicManager, Inc. the leading provider of ERM infrastructure solutions. Steven is the author of the Risk and Insurance Management Society (RIMS) Risk Maturity Model for ERM, the RIMS State of ERM Report and a RIMS Fellow (RF) instructor on ERM. Steven is a patent author of risk and process management technology and holds MBA and MA degrees from the University of Pennsylvania’s Wharton School of Business and The Joseph H. Lauder Institute of International Management.