The consultation paper presents a series of key questions to relevant stakeholders in the risk management community, focusing on three critical areas:

• Corporate Governance: Exploring options that define the roles and responsibilities of the risk manager.

• Capabilities: Proposing a capabilities framework to help clarify the role of the risk manager.

• Communication: Offering guidance on how risk managers can raise their profile and engage more effectively with key stakeholders.

Developed by FERMA’s ERM Committee, the paper builds on the 2023 White Paper “The Roadmap to Strategic Risk Management”. Feedback from this consultation process, which will involve member associations and selected key stakeholders, will inform a subsequent White Paper by the ERM Committee, scheduled for release later this year.

Removing Barriers to ERM’s Strategic Value

The initiative seeks to help risk managers and senior management address the operational and hierarchical challenges preventing ERM from fully delivering its strategic benefits in an increasingly volatile and interconnected risk landscape.

FERMA identifies several key obstacles:

• Lack of Alignment: A lack of alignment on core risk management concepts within organisations, including risk definitions and ERM scope, can be a significant hindrance. While financial, operational, and compliance risks are typically well-defined, business risks are often not well-documented. A lack of clarity around risk methodology and the expected contributions of risk managers can further limit their involvement in short- to medium-term business planning.

• Inconsistent ERM Frameworks: Current ERM frameworks, such as COSO ERM and ISO 31000, are often too broad and non-mandatory, with organisations often interpreting and applying them in very different ways. This can result in diverse reporting lines for risk managers and a lack of clear organisational structures that distinguish responsibilities and reporting between risk, compliance, insurance, audit, and sustainability functions.

• Communication Gaps: Given their central function, corporate risk managers are required to communicate and coordinate with multiple different stakeholders which can prove challenging when tailoring messaging for such a broad audience. Further, practitioners require a wide scope of technical, analytical, and interpersonal skills to fulfil their role, yet there can be a lack of consensus regarding the appropriate training.

Commenting on the ERM challenge, Dr. Ulrich Adamheit, Chair of FERMA’s ERM Committee, said: “The increasing importance of identifying, assessing, and mitigating potential threats to assets and operations means organisations must take every step needed to elevate the ERM function within their strategic hierarchy. This will include reassessing ERM’s position within their organisational structures, establishing more defined roles and responsibilities, and eliminating obstacles to effective strategic engagement.”

Laurence Eeckman, FERMA Board Member, added: “Through the development of a White Paper, FERMA seeks to bring greater rigour to the definition of the corporate risk manager’s role, clarify its scope, and demonstrate how risk managers can play a more integrated and impactful role in supporting decision-making at all levels. Achieving this will not only strengthen resilience but also enhance a company’s competitiveness in an increasingly demanding business environment.”