Enterprise Risk Management vs Project Risk Management
Within the realm of Risk Management, two distinct approaches reign supreme—Enterprise Risk Management (ERM) and Project Risk Management (PRM).
As a certified risk professional, trained by the esteemed Institute of Risk Management (IRM), I have delved into the depths of these methodologies, uncovering their unique characteristics and their often exaggerated differences.On this enlightening journey, we will navigate the waters of ERM and PRM, exploring their contrasting nature, overlapping areas, and the benefits of their harmonious integration. As we delve deeper, we will witness how Safran Risk Manager (SRM) emerges as a unifying force, empowering organizations to foster a holistic and comprehensive approach to Risk Management.
Defining ERM and PRM - Seeking Common Ground:
As an IRM-certified risk professional, my understanding of ERM is deeply rooted in the notion of organizations as extended enterprises, perpetually exposed to a cycle of risk and control. In contrast, PRM finds its essence in the realm of projects, with a clear start and end, and distinct objectives to be achieved. While these approaches may seem divergent, it is crucial to recognize the common threads that unite them—a shared focus on Risk Management fundamentals.
The Clash of Actions and Controls:
The clash between ERM and PRM becomes apparent when we examine the realm of actions and controls. In PRM, actions are finite in duration, budgeted, and directly tied to the project's specific objectives. Conversely, ERM views such actions as controls, perpetually in place, safeguarding the organization from enduring risks. For example, the three-way matching process serves as a permanent control against fraudulent invoicing. This clash of mindsets regarding actions highlights the nuanced differences between ERM and PRM.
The Synergy of Integration:
The true power lies in integrating ERM and PRM, forging a synergy that transcends their apparent disparities. By seamlessly incorporating ERM principles into PRM, organizations can harness the benefits of systemic risk mitigation strategies, particularly within project portfolios. This integration allows for a comprehensive view of risks, enabling informed decision making that aligns with organizational sustainability and success.
Bridging the Time Frame Gap:
One of the key challenges in bridging the gap between ERM and PRM lies in the divergent time frames of operation. PRM focuses on project-specific objectives, with a defined start and end, while ERM has an eternal perspective, centered on sustaining the organization itself. Striking a balance between these contrasting time frames requires a delicate orchestration of processes and communication channels.
Empowering Integration with Safran Risk Manager (SRM):
In this dynamic interplay between ERM and PRM, Safran Risk Manager (SRM) emerges as a powerful tool, fostering a seamless integration of Risk Management practices. SRM acts as a beacon of consistency, providing a centralized platform for gathering and assessing risks. Its intuitive interface invites the active participation of stakeholders across the organization, nurturing an engaged and risk-aware culture. Through SRM, PRM becomes closely aligned with ERM, facilitating efficient decision making at senior level.
As we navigate the intricate waters of Risk Management, the convergence of Enterprise Risk Management (ERM) and Project Risk Management (PRM) becomes evident. By embracing the shared fundamentals, bridging the gaps, and harnessing the unifying force of Safran Risk Manager (Get the SRM Brochure), organizations can unlock the power of a comprehensive and integrated Risk Management approach. Let us embark on this transformative journey, where ERM and PRM intertwine, paving the way for resilience, informed decision making, and sustainable success in the face of uncertainty.