Surpass the Competition and Exceed Expectations with ERM

If your credit union views risk management as an intermittent irritation instead of an opportunity to create a competitive edge, it might be time to rethink your approach.

For your credit union to stay competitive in our threat-laden times, stronger risk management is necessary. Enter Enterprise Risk Management (ERM). With an ERM program, your organization can gain more control by being able to operate and organize risk management activities for the safety and security of your institution’s sensitive data.

So, what exactly is ERM? In a previous blog article on risk management, Michael Berman, the founder and CEO of Ncontracts (a Vizo Financial partner), describes ERM as a “comprehensive approach to managing risk that necessitates ongoing communication and coordination between business units.” Mr. Berman also makes the important note that, “distinct from baseline risk management, ERM involves active participation from senior management and the continuous evaluation of risk.”

ERM has become a top priority at many organizations, especially credit unions. As you work to identify areas for improving risk management, it’s important to also consider the factors that impact the current climate of our industry, such as:

• Uncertainties within the market and economy
• Technological changes and advancements
• Interconnectivity of global risks

ERM – Your Competitive Edge

Rather than just checking the boxes and aiming to avoid risk, think of your ERM program as your key to unlocking a competitive advantage. Risk management can be a leveraging component and strong asset in our constantly evolving, modern world.

When your ERM program is utilized effectively, you can proactively manage risks, optimize resource allocation and make better strategic decisions. Here are some examples of the areas where threats can quickly take a toll at your institution:

• Interference with your business strategy
• Limitations on revenue streams
• Negatively impacting your trust and reputation with members and your community

A Closer Look at the Benefits of ERM

When you are looking to improve your risk prevention methods and avoid the harmful circumstances mentioned above, there are many factors to consider. Indeed, establishing an ERM program can seem daunting, but the benefits far outweigh the alternative. Here's a more detailed overview of how ERM standards can be a competitive advantage for your institution:

1. Proactive Risk Management:

• Identify and Assess Risks — ERM helps organizations identify and assess various risks, both internal and external, that could impact their ability to achieve objectives. 
• Develop Risk Response Strategies — By understanding the potential risks, organizations can develop and implement effective risk response strategies, such as mitigation, avoidance or acceptance. 
• Reduce Uncertainty — Proactive risk management reduces uncertainty and improves the likelihood of achieving strategic goals. 

2. Enhanced Decision-Making:

• Informed Decisions — ERM provides valuable insights into risks and opportunities, enabling better-informed decision-making at all levels of the organization. 
• Strategic Alignment — ERM helps ensure that risk management activities are aligned with the organization's strategic objectives, promoting a more cohesive and effective approach. 
• Resource Optimization — By understanding and managing risks, organizations can optimize resource allocation and ensure that resources are used efficiently. 

3. Improved Performance and Resilience:

• Increased Efficiency — Effective ERM can lead to increased operational efficiency and reduced costs associated with unexpected events or failures. 
• Enhanced Reputation — Strong risk management practices can enhance an organization's reputation and build trust with stakeholders. 
• Greater Resilience — By proactively managing risks, organizations can become more resilient to unforeseen events and challenges, ensuring their long-term sustainability. 

4. Competitive Advantage:

• Innovation — ERM can foster a culture of innovation by encouraging organizations to explore new opportunities while managing the associated risks. 
• Adaptability — Strong risk management capabilities enable organizations to adapt quickly to changing market conditions and emerging threats. 
• Differentiation — By effectively managing risks, organizations can differentiate themselves from competitors and build a stronger competitive position. 

Want to explore more ways that ERM can help deliver competitive advantages for your credit union? Contact your corporate account manager today or visit the Additional Services page on our website to learn more!

Erin Doan is the VP of administration for Vizo Financial. Her role involves oversight of administrative support services for the Corporate's president/CEO, board of directors, committee members and other executive staff. She's also responsible for developing and implementing diversity, equity and inclusion (DEI) and community involvement strategies and programs that foster an environment of inclusivity and collaboration amongst staff, business partners and natural person credit unions.