The enterprise risk management (ERM) process is “continuous and dynamic,” with organizations continually striving to meet new opportunities and challenges (p. 77). Using the Internet Resources provided by your textbook (p. 91), journal articles, (https://deloitte.wsj.com/riskandcompliance/tag/enterprise_risk_management) and media outlets, find a real-world event that showcases ERM in the healthcare industry.
Use your example to discuss the following questions:
Explain the steps taken in the ERM process for your event
What broad categories of risks are considered in the ERM program? How are they evident in your example?
Why is the ability to forecast losses important for a risk manager, and how is this need demonstrated by the news you found?
Your paper must be a minimum of 1500 words, not including the title page or reference page. A minimum of 4 references must be included: 1 from the course textbook, 1 from the “news” website, and 2 additional of your choosing. Use proper APA 7th edition citations on the reference page and in the text.
According to Redja et al. (2020), enterprise risk management (ERM) is a strategic business discipline that supports the achievement of an organization’s objectives by addressing all the risks that the organization faces. The healthcare industry uses ERM to improve organizational value creation and promote a safe environment for the provision and reception of healthcare services.
- Discuss the following questions in your initial post:
- Since ERM programs differ from traditional risk management programs, what additional expertise, aside from the knowledge of hazard risks, must a Chief Risk Officer (CRO) possess and why?
- Why might members of an organization resist the implementation of an enterprise risk management program and how can this resistance be overcome by the officer?
Read this survey of 15 risk officers active in the healthcare industry. (chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://bmchealthservres.biomedcentral.com/counter/pdf/10.1186/s12913-018-3400-7.pdf) What do you think are some of the unique risks CROs in healthcare face, and why?
Your writings must be written in APA 7th edition style and must be at least 500 characters in length and consist of at least 3 peer-reviewed resources, one of which, must be your course text.
Expert Solution Preview
Enterprise Risk Management (ERM) is a crucial process in the healthcare industry as it helps organizations identify, assess, and respond to potential risks that can impact their objectives. In this assignment, we will explore two different aspects of ERM in the healthcare industry. The first question focuses on a real-world event that showcases ERM in action, while the second question discusses the additional expertise required by Chief Risk Officers (CROs) and the challenges they may face. Both questions require a deep understanding of ERM principles and their application in the healthcare context.
Answer to Question 1:
One real-world event that highlights the implementation of ERM in the healthcare industry is the COVID-19 pandemic. The steps taken in the ERM process for this event can be outlined as follows:
1. Identification of Risks: Healthcare organizations recognized the potential risks of a novel virus outbreak and its potential impact on public health.
2. Risk Assessment: The risks associated with COVID-19 were assessed in terms of their severity, probability, and potential consequences. Healthcare professionals, epidemiologists, and public health experts played a crucial role in this assessment.
3. Risk Response and Mitigation: Organizations developed strategies and response plans to address the identified risks. This included implementing infection control measures, developing protocols for testing and treatment, ensuring sufficient medical supplies, and engaging in contact tracing.
4. Monitoring and Review: Continuous monitoring of the evolving situation was essential to adapt risk mitigation strategies. Healthcare organizations and public health agencies collaborated closely to track the spread of the virus, evaluate the effectiveness of interventions, and update response plans accordingly.
The broad categories of risks considered in the ERM program for the COVID-19 pandemic include:
1. Public Health Risks: The primary risk was the potential for widespread transmission of the virus, leading to a high number of infections and fatalities. Additionally, the strain on healthcare systems, scarcity of resources, and long-term health impacts were also significant considerations.
2. Operational Risks: As the pandemic progressed, healthcare organizations had to adapt their operations to cope with the surge in patient volume, enhance telehealth capabilities, and manage staffing and resource allocation challenges.
3. Financial Risks: The pandemic posed significant financial risks to healthcare organizations. These included increased expenses for personal protective equipment (PPE), testing supplies, and other essential resources, as well as reduced revenue due to the cancellation of elective procedures and decreased patient visits.
The ability to forecast losses is crucial for a risk manager as it allows for proactive risk management and decision-making. By accurately predicting potential losses, risk managers can allocate resources effectively, implement necessary protocols and interventions, and ensure the organization is prepared for any adverse financial or operational impacts. In the case of the COVID-19 pandemic, forecasting losses was essential in understanding the financial strain on healthcare systems, estimating resource requirements, and implementing cost-saving measures to mitigate the impact.
Answer to Question 2:
In addition to knowledge of hazard risks, a Chief Risk Officer (CRO) in an ERM program requires additional expertise. Some of the additional expertise that a CRO must possess includes:
1. Strategic Decision-making: A CRO needs to understand the organization’s strategic objectives and align risk management activities with those objectives. They must possess the ability to analyze risks from a strategic perspective and provide insights for informed decision-making.
2. Financial Analysis: CROs need to have a thorough understanding of financial analysis to assess the financial implications of various risks. This includes evaluating the potential impact on revenues, expenses, and overall financial sustainability.
3. Regulatory Compliance: Healthcare organizations operate within a complex regulatory environment. As such, CROs must possess expertise in regulatory compliance to ensure that risk management practices align with applicable laws, rules, and regulations.
4. Change Management: Implementing ERM programs often requires significant organizational change. CROs must possess change management skills to effectively communicate and drive adoption of risk management processes and procedures throughout the organization.
Some members of an organization may resist the implementation of an ERM program due to various reasons, such as:
1. Resistance to Change: Change can be perceived as disruptive and may encounter resistance from employees who are comfortable with existing processes or skeptical about the benefits of ERM.
2. Lack of Understanding: Some individuals may not fully understand the purpose and benefits of an ERM program, leading to resistance or reluctance to engage in the process.
3. Perceived Loss of Autonomy: ERM programs often involve standardized processes and procedures, which may be seen as limiting or encroaching on individual decision-making authority.
To overcome resistance, a CRO can employ several strategies, including:
1. Education and Communication: Clearly explaining the purpose and benefits of ERM to all stakeholders can alleviate concerns and build support for the program.
2. Involvement and Collaboration: Engaging employees in the ERM process and involving them in decision-making can help address concerns and increase ownership and commitment.
3. Visible Leadership Support: When leaders demonstrate their commitment to ERM and actively participate in the process, it can influence others to embrace the program as well.
The unique risks that CROs in healthcare face can be identified by examining the survey of 15 risk officers active in the healthcare industry. Some of these unique risks include:
1. Patient Safety and Quality: Healthcare organizations have a fundamental responsibility to ensure patient safety and deliver high-quality care. CROs must address risks related to medical errors, adverse events, and the overall patient experience.
2. Healthcare Fraud and Abuse: Given the complexities of healthcare billing and reimbursement, healthcare organizations are vulnerable to fraud and abuse. CROs must proactively manage these risks to prevent financial losses and maintain ethical standards.
3. Regulatory Compliance and Data Security: Healthcare organizations handle sensitive patient information and must comply with numerous regulations. CROs must navigate the complex landscape of healthcare regulations and ensure data security and privacy.
In conclusion, the ERM process in the healthcare industry is dynamic and continuous. It involves the identification, assessment, and response to potential risks that can impact organizational objectives. Chief Risk Officers play a crucial role in implementing ERM programs and must possess additional expertise beyond hazard risk knowledge. Overcoming resistance to ERM implementation requires effective communication, involvement, and visible leadership support. CROs in healthcare face unique risks related to patient safety, healthcare fraud, regulatory compliance, and data security.