Enterprise Risk Management Initiative – The Role of
Leadership and Management
Richard A. Coskren , CPCU, and Celene Adams
forward-thinking risk managers, the days of identifying
and dealing with only a portion of the risks facing
businesses today are
need to anticipate, prevent and mitigate risk throughout
the entire enterprise. Traditional risk managers
are generally comfortable dealing with property,
liability, and heath and safety risks, often in
while important, these risks are often just the tip of
the iceberg. The current crisis in world financial
markets is just one example of an often ignored risk
that must be anticipated and planned for. Others include
emerging technological developments, potential
legislative changes, neighborhood and regional
catastrophes, key person departures/defections,
international currency fluctuations, employee
misbehavior and data security.
numerous courses and other resources are available to
discuss the technical elements of an enterprise risk
management initiative, not enough attention is paid to
the leadership and management skills necessary to pull
enterprise risk management cuts across so many
disciplines and can often be incorrectly perceived as
administrative vs. strategic, creating and implementing
a company-wide or enterprise risk management initiative
requires both leadership and management skills, with an
emphasis on leadership. As a matter of fact, studies
show that executing a major change initiative such as
switching from targeted risk management to enterprise
risk management requires 70 percent leadership and 30
percent management. Consequently, while management
skills are essential to executing a plan, we need
leadership skills to define it, sell it and motivate
others to execute it.
the difference between leading and managing?
leaders “see,” while managers “do.”
envision a long-term direction, communicate it, and
motivate others to implement it.
leaders paint a clear picture of what the future will
look like, articulate their vision using all mediums and
venues available, and speak, write and/or broadcast
their vision across all levels of the organization at
every opportunity. Further, leaders establish direct and
subtle reward and recognition systems to motivate and
inspire others to commit to and execute the specifics of
on the other hand, plan, organize and control the
processes necessary to move toward the vision defined.
ensure we staff properly, stay
on budget and that employees meet specific goals. They
keep records, measure results, track
performance, recognize and reward employee achievement,
and monitor accountability.
leadership and managerial skills overlap?
important to recognize that leadership and managerial
skills overlap. In implementing an enterprise risk
management initiative, we need to clearly delineate the
leadership and managerial functions of key personnel.
Clearly, the individual responsible for the switch from
a targeted approach to an enterprise-wide initiative
must have the leadership skills necessary to define,
communicate and motivate others to execute while having
some skill at planning, organizing and controlling. This
leader must be positioned at the executive table and
have credibility at all levels of the organization. On
the other hand, those charged with execution must be
very skilled at the management disciplines while having
some leadership responsibility within their defined
areas of responsibility.
a manager in charge of safety initiatives designed to
protect staff and reduce the company’s workers’
compensation experience modification rate would
need to clearly define the need, communicate it
throughout the organization and motivate managers and
professionals to behave safely (leadership skill) while
developing a plan to implement specific safety programs,
track their results and recognize performance
because both leadership and management skills are
required in varying degrees
depending on initiative responsibilities, we need to be
able to identify the presence of both when preparing to
staff for implementing such a major change initiative.
and management skills
How do we
identify our leadership
and management skills? One way is to use an assessment
could be an externally completed or self-assessed
questionnaire that measures both
leadership and management skills.
we could use
an assessment tool to rate a manager’s activities,
such as monitoring results, creating teams, and/or
identifying and correcting deviations from plan.
assessment/development tool measures
both how importantly the employee rates the activity and
how comfortable and effective he or she is with it.
Further, a quality self-assessment tool often uses
a forced distribution method to minimize the chances of
employees over- or understating their abilities.
Once we have
an accurate assessment of staff leadership and
management skills, we will know where gaps exist and be
in a position to close them. The
tool should include a development aspect that lists
activities for managers to complete to improve deficient
one activity might be a project in which the manager is
asked to create allies and gain their input, since
creating collaboration is essential to leading.
Another activity might require the manager to
learn to use a variety of means to convey a message
and/or to increase the volume and scope of that
communication via different mediums and techniques,
since infusing an organizational culture with the
leaders’ vision is another essential leadership
recognize leaders using behavioral interview techniques
to recognizing leadership skills in existing staff, we
need to know how to recognize them in potential hires.
One way to do
this is by using behavioral interview techniques.
questions that target specific skill sets leaders need,
such as envisaging direction, communicating and
motivating, and asking candidates to describe how they
have successfully applied these skills in previous
we might ask, “Tell me about a time when you had a
view of how things could be and turned it into a vision
statement that you and/or your company or department
risk management environment, you need to be preemptive,
not reactive, and this takes leadership.
Make sure you assess your organization’s
leadership capability before implementing your enterprise
risk management initiative.
Coskren, CPCU, is the immediate past President and CEO
of the Insurance Educational Association, a member of
the Aspen Risk Management Group adjunct staff, and
current President and CEO of Polestar Performance
Programs. Contact Aspen Risk Management Group at www.aspenrmg.com,
Adams is a San Diego-based freelance writer.
Contact Celene at