In an environment where business has been subjected to repeated shocks, such as the COVID-19 pandemics and Russia’s invasion Ukraine, agility has become a desirable organisational quality.
Organizations that can quickly pivot to avoid risk and take advantage of opportunities are more likely to succeed than their competitors. This has made agility an increasingly important priority for governance bodies and management.
New guidanceWednesday’s announcement by the Committee of Sponsoring Organizations of the Treadway Commission, (COSO), In an age of speed and disruption, enabling organizational agilityLeaders who are determined to increase agility as a priority in their enterprise risks management (ERM) processes will find strategies in this book.
The guidance offers strategies for using COSO’s 2017 ERM framework to address agility.
Paul Sobel, COSO Chairman, stated in a press release that leaders must not only move fast but also have a sense for direction when leading an organisation. ERM practices must be aligned with an organisation’s agile approach in order to help them achieve their objectives and gain enhanced value in a world that is constantly changing. The COSO ERM framework is a great way to think about where and how risk should be considered in order for companies to become more agile.
COSO is dedicated helping businesses improve internal control, ERM and governance, as well as fraud deterrence. COSO is sponsored by the AICPA. The AICPA offers tips for ERM leaders to thrive in an agile environment.
- Regularly assessing the environment and the potential for the strategic approach to succeed there.
- Taking risks, but never blindly.
- Incorporating the speed of change, risks and disruption into new business models.
- Be aware that agility can reduce some risks, but also introduce new risks.
- It is important to understand and gather the noise in the market as it affects the business model and the operating model. Also, it is important to build an early-warning program.
- ERM needs to be evaluated regularly.
“Organisational greatness requires taking risks, but not blindly.” In a news release, Paul Walker, CPA and Ph.D., who is the author of the COSO paper as well as the leader of the Center for Excellence in ERM in St. John’s University’s Tobin College of Business in New York, stated that leaders of organisations should evaluate the environment in which their organisation operates and the ability of their strategy to succeed in that environment. An ERM framework and an ERM team can be crucial in helping organisations manage risk. Importantly, the ERM function needs to be updated in order to keep up with these changes. Otherwise, it will be quickly out of tune with the rest.
Ken Tysiac is available to provide feedback or suggestions for articles. [email protected].