“Be responsible and effective. Strike a balance.”

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“Be responsible and effective. Strike a balance.”

Deloitte Extended Enterprise Risk Management Report Part VI – Leveraging external assistance

Deloitte has been conducting the annual global survey on extended enterprise risk management (EERM) for five years now. The latest edition includes the views and observations of 1,145 respondents from 20 countries all over the world. Based on the survey results, Deloitte has released a report focusing on the prevailing trends and EERM challenges faced by organizations. This year’s report is unique as in addition to surveys completed between November 2019 and January 2020 it also includes information obtained subsequently on the response of enterprises and the third parties in their ecosystems to the rapid developments driven by the pandemic of COVID-19.

The report is entitled “Be responsible and effective. Strike a balance.” This article is the sixth in a series of eight publications aimed to discuss the key themes emerging from the survey. It discusses how organizations leverage external assistance in external enterprise risk management (EERM).
 

Federated EERM models

The majority of organizations strive to achieve decentralization of market-facing activities. It runs counter to increasing centralization of risk management and control, which has been observed over the past five years. More federated EERM models have started to dominate, as they facilitate effective cooperation and information sharing among partly autonomous, decentralized systems. Typically, these are underpinned by a center of excellence (CoE) or shared service structure (SSC).

Federated EERM models also lend themselves well to embracing outsourced models. Drawing on their more extensive experience, external providers can often deploy trusted workers faster to address organizational EERM challenges more efficiently and effectively.
 

Findings

Our report reveals that a growing number of organizations use external support to improve and supplement their EERM programs. That includes assistance with managed services, licenses and patents or extended enterprise risk management.

  • Eighteen percent of respondents supplement available EERM resources through membership of a specialist community or utility where EERM data is shared. A further 25% intend to do so in the future.
  • Fifteen percent rely, at least partially, on the expertise and resources of an external provider of managed EERM services. A further 16% intend to do so in the future.
  • Sixteen percent use an external managed services provider’s EERM technology solution as a service. Twenty-five percent intend to do so in the future.

Additionally, nearly a quarter of organizations at least partially outsource CoEs and SSCs.
 

Deloitte point of view

Insourcing may be an attractive option to consider where the immediate need is to maintain direct control over operations and processes. However, we believe the use of external support for improving organizational EERM programs will be judicious in the longer term.

The availability of vast experience and relevant expertise enables external providers to help organizations thrive even during the COVID-19 pandemic.

Interest in managed services, licenses and patents or extended enterprise risk management continues to grow. We believe that their development will reduce EERM costs while improving the quality services.

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