Increase the Success Rate of Your Strategies and Initiatives through an Enterprise Risk Management System

  • by Frank Rambo, PhD, Director, Customer Solution Adoption (CSA), EMEA
  • September 3, 2010
Many risk managers complain about a lack of enterprise insight and alignment of risk management to the strategic objectives of their organization. With a rather manual and inconsistent approach based on emails and spreadsheets, they often fail to oversee the impact of risks to the strategic goals and whether appropriate risk responses were implemented to mitigate risks. SAP BusinessObjects Risk Management 3.0 is an enterprise-scalable, near real-time, integrative solution to align enterprise risk management with corporate strategy initiatives, and effectively mitigate risk. Learn how it optimizes corporate performance, maximizes visibility of risk impacts and effectiveness of risk responses, and sends out early alerts through automated monitoring of key risk indicators.
Key Concept
SAP BusinessObjects Risk Management 3.0 focuses on the enterprise risk management process, including risk planning, risk identification, risk analysis, risk response, and risk monitoring. A separately licensed product, SAP BusinessObjects Process Control 3.0 provides a centralized solution for internal control management. In combination, both products provide a closed-loop solution for risk identification, risk prioritization, implementation of controls for the business processes at risk, issue remediation, and feedback of control completeness and effectiveness to determine the effective residual risk levels displayed in the risk heat map of SAP BusinessObjects Risk Management 3.0. SAP BusinessObjects Risk Management 3.0 provides a Web service-based interface to SAP or non-SAP solutions for strategy management, providing risk exposure information for key strategic objectives and opening the door to a risk-adjusted management of corporate performance.

In recent years, the importance of enterprise risk management (ERM) systems has risen, and still many companies don’t have a formal risk management system in place. Or, they have processes in place, but execute them in a siloed and inconsistent approach based on emails and spreadsheets. Typical issues with insufficient mature risk management systems are:

  • Risk managers on board level suffer from a lack of insight into the current status of key business risks, and effectiveness and completeness of implemented risk responses
  • Risk responses are often reactive, one-off actions
  • Risk managers have no real-time indicators at hand upon which to base timely decision making
  • Line managers understand business risks in their area, but can’t use experiences regarding risks and appropriate responses from other business areas
  • Missing understanding of risk interdependencies that can accumulate multiple risks in combination to a perfect storm causing significant losses
  • No feedback of risk exposure into the corporate strategy to identify strategic objectives at risk and take appropriate remediation actions in time

SAP Business Objects Risk Management 3.0 addresses these issues and helps institutionalize ERM in your organization. It reduces risk and loss events through near real-time risk transparency and by applying response measures based on your strategies and initiatives. It comes with a number of strengths:

  • Enterprise scalability: The application runs on the SAP NetWeaver platform and comes with a fine-grained, object-level security concept
  • Collaboration: It reaches out to all stakeholders in your company in workflow-driven processes to collect the best quality information on risks, risk responses, and incidents directly from where it resides in the business. This also includes your employees, who can propose new risks in a self-service scenario. The application also provides the means to share risk information across the organization so that you have the complete risk intelligence of your enterprise at hand when needed.
  • Near real-time: The application provides continuous monitoring of key risk indicators (KRIs) implemented as automated queries in your SAP and non-SAP business systems. Moreover, its integration with SAP BusinessObjects Process Control 3.0 permits you to assign controls as risk responses for mitigation, measure their completeness and effectiveness in processes at risk, and update residual risk levels accordingly. 
  • Risk interdependencies: The application provides scenario analysis and Monte-Carlo simulations to analyze the impact of risks influencing occurrence of other risks
  • Opportunity management: Opportunities are uncertain events that, if they occur, would have a positive impact on business objectives. Opportunities can be regarded as positive risks and are managed separately, but with similar instruments applied to risks in the application.

Frank Rambo, PhD

Frank Rambo, PhD, is managing a team within SAP’s Customer Solution Adoption (CSA) organization working with customers in the SAP analytics area with the objective to drive adoption of new, innovative solutions. Prior to this position, he worked eight years for SAP Germany as a senior consultant focusing on SAP security and identity management. Before he joined SAP in 1999, Frank worked as a physicist in an international research team. He lives in Hamburg, Germany.

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