In the last several years, we have evolved our approach to successful enterprise risk management to one that tightly integrates both risk management and performance management into one executive business process.
Our philosophy is simply that organizations make better decisions if they have a structured approach for understanding the opportunities and the risks of decisions throughout the organization. If decisions are evaluated, evolved and managed using a common approach (business process) at all levels of and across the organization, you will have better communication, better decisions and greater confidence in decisions made throughout the company.
We ask that organizations recognize that improving performance management and ERM is an on-going process that must start at the top (meaning it requires C-Level champions) but must be evolved from the core managers in the organization. For that reason we tend to start with a focus on identifying a few core areas of need, fixing those issues using a structured business process and then taking those victories and using those to begin to expand the culture throughout the organization. In this way, you will get early value that generates confidence in the process at low cost, and that builds acceptance so that the culture can change over time.
Pace Global focuses on four areas when recommending changes to an organization’s ERM and performance management activities. First is a common business process for making decisions. Pace Global calls its approach effective decision making under uncertainty since every utility is trying to deal with regulatory, market and a variety of other uncertainties. The second, we look for ways to provide integrated solutions by evaluating and developing key processes across the organization. Stove-piped organizations are typically inefficient. Efficiencies can be gained by breaking down barriers through effective communication, and effective use of the processes and solutions. Third is having supporting systems that enable effective decision making. Cumbersome and outdated systems hamper effective decision making because they are slow and costly to use effectively. Typically we find that replacement of solution software is not the answer, but rather making better and more effective use of existing systems combined with proven business processes that promote corporate alignment of goals and objectives. Finally, a strong governance structure with clearly defined roles, responsibilities, and objectives, is crucial to aligning activities within the organization. It is hard to change a culture unless it is accepted in the organization. Our focus is finding receptive people as a building block and then bringing others along once proven to add value.