Enterprise Risk Management

The profile of risk management has risen considerably in the last decade. Following some high-profile corporate failures, more and more of the business world is turning to the discipline of Enterprise Risk Management (ERM) to help them manage uncertainty, avoid ‘shocks’ to the system and instill confidence in the minds of investors. Risks take many forms – strategic, operational, financial and compliance – and communications providers are susceptible to a wide variety of risks in practice. For communications providers, risks are driven by:

• working in highly-regulated markets; the importance of reputation and brand perception;
• intensifying competition;
• long planning horizons; execution challenges for project and program management; and keeping pace with rapid technological change.

Whilst risks have traditionally been managed in functional silos, demonstrating an enterprise-wide understanding of risk has become more important because of corporate governance standards that make the board accountable for the complete range of risks in their business. To support the board, businesses now need systematic methods for communicating and appraising risks.

The benefits of such methods are seen in:

• lowering finance costs, especially because credit rating agencies now explicitly review ERM as part of their rating process;
• mitigation and prevention of unpredictable downside impacts like service outages and frauds, which have a knock-on impact of reducing revenues and increasing costs;
• reducing insurance premiums; and
• anticipating and supporting the satisfaction of regulatory and legal obligations.

To be effective, risk awareness needs to be embedded within the communications provider’s organization. By forming a bridge between the TM Forum’s Frameworx and the generic global ERM standards, such as ISO 31000 and the COSO ERM Framework, the TM Forum’s ERM team aims to support the lean execution of ERM within communications providers. Leveraging the TM Forum’s benchmark program will give communications providers a unique opportunity to compare how they manage risk with their peers, and hence to use those benchmark results as a basis for setting and managing the expectations of external stakeholders.

• Forming a bridge between the Frameworx and the generic global ERM standards, such as ISO 31000 and the COSO ERM
• Leveraging the TM Forum’s benchmark program to manage risk

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