Bridging Transparency and Action
Effective communication and reporting are pivotal to the success of Enterprise Risk Management (ERM). They form the bridge between identifying risks and taking action to manage them. This blog will delve into the best practices for risk communication and reporting, ensuring that these critical insights reach all stakeholders and translate into informed decision-making.
Series
This Article is just one within the series on Enterprise Risk Management
The Imperative for ERM Communication and Reporting
The significance of ERM reporting and communication lies in its capacity to foster transparency, build trust, and prompt action. As Denise Brosseau, thought leadership strategist at Stanford University, asserts, “Clarity, consistency, and constancy are the three keys to successful communication” (Brosseau, 2014). These principles are particularly pertinent when it comes to conveying risk information—where the stakes involve the strategic future of the organization.
Best Practice Insights
Modern thought leaders point to a few key practices for effective ERM communication and reporting. The importance of tailoring the message to different audiences, the use of visual tools for conveying complex information, and the implementation of regular and systematic reporting cycles are emphasized by institutions such as the Harvard Business Review and the Project Management Institute (PMI).
Thought Leaders in the Field
- Denise Brosseau, Stanford University – Specializes in the field of thought leadership and effective communication strategies.
- Dr. Robert S. Kaplan, Harvard Business School – Known for his work on management systems and strategy communication.
- Dr. David Hillson, The Risk Doctor – An international thought leader in risk management with a focus on risk communication.
Excellent Additional Reading
- The Art of Communicating Risk by David Hillson – Offers in-depth techniques for communicating risk effectively to stakeholders.
- Made to Stick: Why Some Ideas Survive and Others Die by Chip Heath and Dan Heath – Though not specific to risk communication, it provides valuable insights into making complex ideas understandable and memorable.
- Risk Communication: A Handbook for Communicating Environmental, Safety, and Health Risks by Regina E. Lundgren and Andrea H. McMakin – A guide to the principles and practices of risk communication.
What Separates Great from Good
Great ERM Reporting and Communication:
- Stakeholder-Centric: Outstanding ERM communication is designed with the stakeholders in mind, ensuring that the message is not only delivered but also understood and acted upon.
- Integration with Decision Processes: Great reporting systems are integrated with organizational decision-making processes, providing timely and relevant information that can influence strategic directions.
- Consistent Engagement: Leading ERM communication strategies involve regular engagement with stakeholders, fostering a culture of transparency and ongoing dialogue about risks.
Good ERM Reporting and Communication, while effective, often:
- Misses Tailoring: Good communication may deliver information but not necessarily in ways that are most accessible or actionable for various stakeholders.
- Lacks Integration: Good reporting might be conducted as a separate exercise rather than as an integrated part of the decision-making cycle.
- Inconsistent Frequency: The frequency of communication may vary, which can lead to stakeholders being less informed or engaged in the ERM process.
Key takeaways
The effectiveness of ERM hinges not just on the identification and management of risks but also on how well these risks are communicated and reported. Bridging the gap between transparency and action requires a commitment to stakeholder-centric communication, integrated reporting processes, and consistent engagement. By adopting these best practices, organizations can ensure that their ERM efforts are both seen and felt across the organization.
Call to Action
Evaluate your organization’s ERM communication and reporting. Is it tailored, integrated, and engaging? How can you move from good to great in communicating risk? Elevate your ERM practices by enhancing the way you communicate and report risks.
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