Communication and Leadership for Improving ERM Effectiveness

Abstract

Many companies implementing Enterprise Risk Management (ERM) struggle with its effectiveness. Available studies of risk practitioners’ practices describe and categorise phenomena related to establishing ERM. This qualitative study uses a cross-sectional field design to explore risk practitioners’ communication and leadership practices for achieving and maintaining effectiveness. It forms a practical guide for risk practitioners to manage ERM effectiveness and for organisations to optimise risk development programs. Risk practitioners apply four practice episodes—the first aims at creating shared knowledge and meaning. The second episode emphasises the value-creating capabilities of the organisational ERM. Leadership, the third practice episode, aims at increasing influence in the decision-making processes. Relationship management is the fourth episode centred on balancing independence and involvement. Executing these practices implies risk practitioners gaining referent and expert power, applying participatory, visionary, and affiliated leadership styles, identifying stakeholder needs, and recognising organisational knowledge barriers.