As long as businesses exist, there are potential risks and hazards that will be encountered to continue to carry on business. Enterprise risk management is the assessment of risks and potential hazards that will affect a business. It is the implementation of activities that do any of the following; manage risks, eliminate risks, or transfer risks. Every company should have an enterprise risk management program that is strategic and aligns with its corporate objectives.
Schlumberger is a multinational global provider of technology for reservoir characterization, drilling, production, and processing in the oil and gas industry. It had a risk management program that was struggling to meet its corporate objectives. In this article, we see how they unraveled the complexity of their processes to manage their risks.
How to Create an Effective Enterprise Risk Management Program
For a company to create an enterprise risk management program that will help it achieve its corporate objectives, it needs to first understand its systems and processes, find out where there are issues, and devise a solution that will make it effective.
Understand the Problem
To deploy an effective enterprise risk management program for its organization, a company needs to understand what its risks are, where they are domiciled and how to deal with them. Companies often make the mistake of allowing individual departments to handle their own risk management initiatives without having a corporate risk management program. This often means that risk assessment and decisions are made in silos that may vary from overall company objectives.
Schlumberger had a complex risk program that was difficult to understand, the premium calculations for its insurance renewal were quite opaque and required long arduous work to process one level budget. The complexity of the insurance renewal program made it difficult to accurately calculate insurance premiums. They often had to rely on their broker to get the data needed to run their processes. The company desired a simplified process and sought to gain more transparency on how to calculate insurance premiums and also to remove the complexity in their risk management programs. The first step they took was to determine what their objectives were, here is what they wanted from the new process
- Improve efficiency and visibility of the risk management program to enhance quick decision-making in the organization.
- Regain full control of insurance renewals and monitoring and remove reliance on third-party.
- Simplify insurance premium calculation and improve transparency in insurance renewals.
Learn more about Schlumberger's objectives
Create a Solution
Having identified the main issues and determined the objectives, to create an efficient enterprise risk management solution, companies should seek a solution that will help them create an effective risk management program. Schlumberger sought a company that will help it create the solution it wants. The company will deliver the main objective of simplifying the risk management process, eliminating the opaque process, and giving them back the opportunity to manage their risk assessment and insurance premium renewals. Ventiv Tech was chosen as the company to rebuild the risk management program of Schlumberger using its Enterprise Risk Management Software
What Ventiv Tech Did
Ventiv Tech took the challenge to transform and revamp the enterprise risk management program of Schlumberger by seeking to untangle the various complexities of the systems. They did the following:
- Had an honest discussion with Schlumberger to determine what they wanted from their new process
- Consulted with all the players involved in the resolution of risk insurance premium calculations, these included brokers, validators, insurers, insured entities, declarants, and invoiced entities.
- Automated processes that were manual and often required a lot of manhours to deliver results
- Eliminated manual data imputation which often led to errors in calculations and poor decisions
- Simplified convoluted processes and made it transparent enough for Schlumberger to have a direct overview of where its assets are and where they are being moved to
- Provided a data analytic dashboard that made it easy for them to visualize and take decisions quickly about their risks profile and also helped them to gain real-time insights into their insurance needs all year round.
The Results
After revamping the enterprise risk management program, Schlumberger had a more simplified system that promoted transparency and gave them the tools to assess and calculate risks more efficiently. Man-hours were saved and the complex processes were resolved. Schlumberger gained control of its risk management processes and could now direct how risks were calculated by country and region. This reduced third-party dependency and gave them the flexibility to respond to any risk situation quickly.
Conclusion
Companies that desire to implement an enterprise risk management program to serve the overall interest of the company and manage their risks effectively need cutting edge tools that are designed to simplify their processes, give them control of their processes and ultimately empower them with the right data and analytics to make quick decisions. Schlumberger realized this was what they needed to remain competitive in an ever-changing world that is full of uncertainties.
Learn more about Ventiv's Integrated Risk Management System.
