Navigating uncertainty through ERM

Navigating uncertainty through ERM

Office of Management and Budget (OMB) Circular A-123, Management’s Responsibility for Enterprise Risk Management and Internal Control, requires federal agencies to implement an enterprise risk management (ERM) capability. The changes in OMB Circular A-123 are transformative to the program and operational practices, as well as the culture of federal agencies.

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Navigating uncertainty through ERM

Implementing ERM can be a challenging journey for federal agencies. KPMG has developed a 10 step practical approach:

  1. Establish clear “ownership” by the agency’s top leadership and cascade ownership down the organizational chain of command, so everyone understands their responsibility.
  2. Appoint a chief risk officer and establish a risk management council.
  3. Establish the risk appetite, and make it part of the day-to-day program and operations management.
  4. Incorporate ERM in strategic planning.
  5. Include ERM in the agency’s formal governance process.
  6. Embed fraud risk management in ERM.
  7. Identify and rank risks and establish mitigation action premised on whether to accept, avoid, reduce, and/or share risks.
  8. Understand long-tail and emerging risks and their potential impact.
  9. Make risk mitigation a critical component of management expectations, focusing on root causes and leveraging leading practices.
  10. View this as a never-ending marathon and not a sprint, and get started!

For more details on OMB Circular A-123 and our 10 steps to implementing ERM, read our white paper.

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