As senior executives look for additional ways to increase shareholder value, they’ve begun to take a different approach in establishing how shareholder value is linked to risk management.

Many of them are beginning to recognise that risk is not just confined to a variety of negative outcomes that should be avoided, but also includes identifying and exploiting opportunities.  This article illustrates how enterprise wide risk management has evolved over the last few years and emphasises how organisations can benefit from adopting it.

Risk on its own is not always a bad thing.  But misunderstood or poorly managed risk is not a good sign.  Many organisations are beginning to accept that risk creates opportunities which in turn create shareholder value.

One key question that senior management should be asking themselves is “how do we manage the organisation’s risks to create value for our shareholders?”

Enterprise wide risk management (EWRM) has become an essential part of doing business in the 21^st century.  It’s a structured process that seeks to align an organisation’s business strategies, human resources, processes, information technology and intellectual capital.  It aims to evaluate and manage the internal and external uncertainty that confronts an organisation as it creates shareholder value.

“Enterprise wide” simply means that it’s an integrated, holistic & forward looking approach.  Traditional “silo”, functional, divisional barriers are removed so that opportunities are identified and exploited and that key business risks are managed to help senior management optimise an organisation’s key resources and to maximise shareholder value.

Senior executives are faced with a range of new challenges in their quest to increase shareholder value.  Enterprise wide risk management must now extend beyond traditional boundaries.  Globalised markets, the internet and ecommerce, increasing customer demands and the pace of modern business are changing rapidly & senior management needs to constantly address new risks.

Organisations are able to use EWRM to gain competitive advantage.  By identifying risks across the entire organisation, senior executives are able to manage and prioritise risks and link them to creating shareholder value.

But many senior management remain unclear on how they can start to translate the EWRM concept into processes that will enable them to create and increase shareholder value.  EWRM may be great in theory.  But senior management will only see its true value when they use information about their risks as a catalyst to drive better business performance and enhance shareholder value.

EWRM provides organisations with a disciplined, structured approach to help achieve their key business objectives, return on investment & drive even greater shareholder value.  Visionary companies are now beginning to embrace enterprise risk management as a powerful business tool.

The best way for you to understand how business coaching works is to recognise the importance of coaching in sports.

Can you imagine recent football World Cup Winners, Spain; The New Zealand All Blacks rugby team; Muhammad Ali, Michael Jordan, Usain Bolt or Tiger Woods performing without a coach who pushed and guided them? 

Their coaches were instrumental in:
*  Ensuring that the team performs at optimum levels;
*  Devising specific strategies and plays to defeat opponents;
*  Ensuring team harmony and that everyone worked for the benefit of the team as a whole
*  Providing one on one support for each player by encouraging and counselling them, where necessary.

Business coaching is no different.  Many small-business owners often have specific experience only in a limited number of areas and lack the holistic vision and skills to grow their business as a whole.

Business coaching should therefore be seen as an investment, rather than an expense or an overhead. You should therefore evaluate your investment in business coaching in terms of return on investment (ROI). You should also remember that business coaching is a long-term investment that will only pay dividends over a period of time and your evaluation should be based accordingly.

But a word of caution.

A business coach is not a magic solution to your problems and you should not think that just by having one, your problems are going to vanish overnight.  You will have to work very hard to translate the input you will see from your coach into concrete action. You are the entrepreneur and the coach is merely a resource or conduit to make things happen.

Some of the areas in which business coaching works well:

Creating an environment for growth. One of the key requirements for managing change and growth is to put in place the proper organisation and create the kind of work environment that promotes teamwork and encourages people to work with one another. The challenge is to acquire and retain high-quality talent. This is not an easy job and involves a number of areas ranging from job evaluation and appraisal to designing the right compensation packages.

Designing and managing systems. Systems are critical to establishing a backbone and a framework for providing support for all employees. Business coaches will often have extensive exposure to a range of systems for different functions such as sales and marketing, governance and human resource management. The right systems have the effect of improving productivity and quality and the ultimate benefit is increased customer satisfaction.

As I have said above, business coaching is only a helping pair of hands and the responsibility for growing your business is yours; fairly and squarely. To make optimum use of your resources, consult with your business coach frequently and extensively.

Do not implement key decisions without fully understanding what to do and how to do it. The consequences of your action should form part of an integral part of any business coaching process.