How a roofing contractor was able to navigate the challenge of family members and differing opinions to develop a successful ERM plan.
At the recent NRCA Legal Resource Center meeting, NRCA Vice President Tom Shanahan explained what Enterprise Risk Management is and why it is so important for contractors to have plans for their businesses. (Read that article here). To help attendees understand the concept further, Monica Cameron of Kansas-based Diamond Roofing shared the story of her family’s business experience in tackling the concept of an ERM.
Monica’s company was started by her dad in the late 1970s. He had grown up on a farm and enjoyed working with his hands. Roofing was a place where he could use those skills. His brother joined the business in the 1980s and they created a succession plan but the two eventually went separate ways and the brother started his own business.
Monica shared that her brother joined their dad’s business in 2008 and he recruited her away from her nursing job to work in the business. He needed her help so he could focus on business growth. In 2011, Monica’s brother contracted a skin infection that had MRSA (methicillin-resistant Staphylococcus aureus) and unfortunately, he lost his battle with the infection. They never had the chance to have the important conversations about how to sustain the business should something happen.
She knew that she needed to learn a lot about the business as quickly as she could. That is when she discovered the Future Executives Institute program offered by NRCA. It was there that she learned the concept of ERM and realized her company needed to take action.
“We were a very safety conscious organization but that was the extent of our risk management,” Monica explained. “One of the struggles that I faced is that while I was learning, the other executives in the company were not. We needed to develop the corporate culture for this first.”
Monica said that it took a lot of time and dedicated effort on her part to help the rest of her team understand the concept and its importance. “We tried to implement it all at once and that failed,” Monica said. “We needed to prioritize because we found out that our frontline management could only handle so much at once.”
With seven family members involved in the business, some very liberal, some very conservative, there was fighting. The first thing they had to do was figure out how they could all sit at the same table and work through developing their company’s ERM plan. They started with strategic planning, defining what their company’s mission really meant for the business. They had some difficult conversations but were able to prioritize and move forward with the process.
In the beginning, the company had a hard time recognizing that ERM is not about having a group of people manage risk within the organization but that it’s really a change management initiative. It reinforces the business objectives and changes the way the company proactively shares information throughout the organization so they can confidently conduct the critical activities necessary to operate a successful business.
Monica shared the following tips for success:
- Start with the basics of having conversations and prioritizing through the use of risk criteria what risks the business is willing to tolerate and which ones it is not willing to take.
- Develop an ERM policy and framework that identifies the accountabilities of key personnel.
- Have an executive risk committee and develop champions who can help promote to and engage with employees.
- Identify and discuss risks as they relate to your organization’s business strategy. Ask each business unit to prepare risk assessments and provide front-line management with a template to identify risks.
- Conduct risk workshops and interviews with employees to develop a common understanding of risk priorities and actions to be taken.
- Twice a year, have management conduct a corporate risk profile to review identified priorities and evaluate changes that may have occurred.
- Gain signoff by frontline management to help them fully understand their accountability regarding risk management.
- Keep a risk calendar to help with managing future events. By keeping track of potential future events and discussing them, you are better equipped to evaluate the possible benefits, opportunities and impacts.