Risk liaisons play an important role at many firms. Although not employed directly by the normally tiny enterprise risk management (ERM) function, they work in the line and help translate the firm’s risk management policies and approach into day-to-day advice and guidance.
In fact, 71% of ERM functions use risk liaisons, according to CEB data, and they are a cost effective way to increase ERM’s impact beyond the average two-person central team. A recent survey of 230 liaisons around the world help paint a picture of what they actually do.
Typically decision makers who wield a lot of influence: While a plurality of organizations in the data set (38%) don’t have a seniority requirement for the liaison role, the extent to which these people are involved in important decisions indicates they hold fairly senior positions.
Indeed, 57% of the liaisons surveyed are involved in material decisions within their unit either to a “large extent,” a “very large extent,” or are “involved in all” material choices. An additional 20% report being involved to a “moderate extent.”
They view risk management as a significant part of their job: Sixty-three percent of respondents spend more than 10% of their time on activities related to risk management—with the majority (52%) of that group spending more than 20% of their time on such activities.
Strong link between a central risk team and liaisons based on reporting relationships: Fifty-five percent of respondents report either directly or via a “dotted line” to the corporate risk management function.
This combination of influence and dedication makes it clear that, if used correctly, liaisons are an excellent way to integrate risk awareness and management into business decision making and to share best practices across the firm.
Setting up this network isn’t always easy, and depending on the size of your firm, or the nature of your risk management team, you may not have deemed it worth your time. However, if you are considering creating or improving a network, this five-page case study from our files may be helpful; it describes how ERM at Eli Lilly chose 14 liaisons, defined their roles, trained them, and reaped the benefits.