Link tactical problems, consequences and strategy in your ERM Business Case

In developing a Business Case for ERM Implementation, it should show clearly how the ERM Program will help to achieve one or more of the organization’s strategic aims and objectives.  It is, in fact, essential in the Business Case for a move to ERM to link tactical problems with consequences and through to strategy.  A major change program will not be endorsed if it relates only to tactical problems.  It must relate to, and show that it will deliver benefits towards the organization’s overall strategy. 

Meanwhile, an ERM Program has 'control' over only the tactical benefits that can be delivered, mainly time to save and time to retrieve.  It has rapidly diminishing 'influence' over how benefits can be realized at the operational and strategic levels. 

This diagram attempts to convey the situation.  There are the three levels – strategic, operational and tactical.  Different ‘levels’ in the organization are generally interested in these different levels of benefits:

• The Management or Executive Board are interested, primarily, in the strategic benefits;
• The Business Area Managers are interested, primarily, in the operational benefits; and
• The users and other stakeholders are interested, primarily, in the tactical benefits.

Most organizations have their strategic performance measures captured in their Balanced Scorecard.  These drive the performance measures and targets at the operational level. 
And these, in turn, drive the performance measures and targets at the tactical level.

The reverse direction is the case when it comes to contributions to benefits.

The benefits that are achieved at the tactical level contribute to the performance measures and targets at the operational level.  And the benefits that are achieved at the operational level contribute to the performance measures and targets at the strategic level.

The important considerations are that:

• Management or the Executive Board must drive the agenda for ERM, with the heads of the business areas (the key stakeholders) at the operational level 'demanding' the benefits that they require from the investment in ERM - and thereby setting the objectives for the ERM Program;
• The Business Case must reflect this situation and explain, convincingly, how the benefits will be achieved at the tactical, the operational and the strategic levels.

By Carl E. Weise