The Evolution of Enterprise Risk Management (ERM)

In the culinary world, the journey from preparing simple meals to achieving Michelin star status can be used as an analogy to mirror the evolution of enterprise risk management. Here’s how businesses can visualise their risk management maturity using this flavourful analogy:

1. Simple Meal - Initial Risk Maturity

At this stage, risk management is basic and informal, akin to cooking a simple home meal. It's reactive, focusing on immediate threats with minimal planning. ⚽ 🥪 I consider this the just-home-from-soccer-training-so-its-toasted-sandwiches-for-dinner-kids kind of approach. Get's the job done.

2. Casual Dining - Developing Risk Maturity

As risk management matures, it becomes more structured, similar to a casual dining experience where the menu is varied and cooking techniques more refined. 🥗 🍔 Think of this as the neighbours-over-for-a-BBQ kind of approach. Everyone brings a plate, enjoys the process and goes home happy.

3. Fine Dining - Defined Risk Maturity

Moving to fine dining, risk processes are well-defined and integrated into daily operations, emphasising detail and sophistication. 🕯 🥘 Think of this as your favourite local restaurant. They have been serving the same menu for years, to the same standard. Doesn't disappoint but not much change or innovation to write home about.

4. Gourmet Restaurant - Managed Risk Maturity

At the gourmet level, risk management is robust, fully integrated, and akin to a gourmet restaurant known for quality and innovation. 🍢 🦐 Wow, a seamless experience with a menu that changes with the seasons. Not for everyone, not desired by everyone, but when you have a special occasion and want to try something new, a perfect choice.

5. Michelin Starred Restaurant - Optimising Risk Maturity

The pinnacle of risk maturity resembles a Michelin-starred restaurant, where exceptional service and strategic culinary excellence drive competitive advantage and set industry standards. 👨‍🍳 👩‍🍳 This is exceptional experience, the whole team working together with the best tools and techniques to create something really special.

Key Takeaway? 🥡 (pardon the pun)

Just as chefs evolve from basic cooks to Michelin-starred professionals, enterprises can develop their risk management from fundamental to advanced stages. Each level adds something to the decision-making environment, to help manage complexity/uncertainty through better connected information /conversations, transforming risk management into a strategic tool that not only protects but also propels the business forward.

I am super excited to be cooking (whoops, I meant speaking) at the RMIA - Risk Management Institute of Australasia conference tomorrow #RMIA24 If you are there, connect with me on the event app or in person to discuss how to elevate your enterprise's risk management to create the right dining experience for your business #EnterpriseRiskManagement #5stars

August Advisory