Enterprise Risk Management Needs Assessment Protocol
Establishing the current status and future direction of an organization’s enterprise risk management (ERM) practices requires an ability to benchmark the existing level of performance and conduct a comparison with industry best practices. The basis for doing this is to evaluate the quality and completeness of the organization’s ERM activities based on the premise that the goal is to effectively control “reasonably foreseeable risk”. Moreover, a methodology is also needed to prioritize which identified ERM needs warrant priority attention.
The objective of this project was to design a management tool that freight organizations can apply to benchmark existing ERM practices, and to identify and prioritize ERM needs. A major project activity involved the conduct of a literature review of concepts and methods that have or are being considered for performing ERM assessments in freight transportation and related industries. This led to a compilation of those elements that might comprise an ERM best practice for the freight transportation industry.
Based on the literature review results, a list was developed of risk categories and event scenarios for benchmarking an organization’s current ERM practices, supporting both absolute and comparative risk analysis. This list served as the framework for the design of a draft management tool (protocol) that freight transportation organizations can use to assess their current risk portfolio, identify gaps in their existing ERM practices, and provide a means for identifying those needs that warrant priority attention.
The objective of phase two of this research project is to build on this previous work by accomplishing the following:
- Utilize the protocol in a pilot application involving a major freight transportation carrier.
- Modify the protocol based on lessons learned from performing the pilot application.
Develop an extension to the protocol to enable evaluation of the benefits and costs of potential risk mitigation strategies that are developed in response to those ERM gaps that have been deemed to warrant priority attention.
Preliminary results of this research are available here as a paper that has been submitted to Risk Management, a refereed journal.
Please contact Mark Abkowitz for more information on this project.
Supplemental Notes: This research was sponsored by the U.S. Department of Transportation, University Transportation Centers Program (University of Memphis, Intermodal Freight Transportation Institute).