Application of Enterprise Risk Management at Airports (2012)

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50 S e c t i o n 7 7.1 Evaluating the Success of ERM Performance To ensure that the ERM framework continues to be relevant, continuous improvement is essential. Continuous improvement should focus on the ERM strategy and process as well as ERM skills and understanding across the airport. It can take time to refine ERM and improve methodologies. Regulators and risk management professionals indicate that good practice is to continuously improve the risk management meth- odologies in line with recommendations from regular assessments and to adapt to changing economic conditions and new opportunities. Key performance indicators (KPIs) can facilitate this assessment by grading progress and achievements. Each airport will need to develop KPIs that align to its specific objectives for ERM and target level of ERM maturity. Those airports that are interested in a high level of ERM maturity will likely need to develop more challenging KPIs than one aiming for a lower level of maturity. Example KPIs include the following: • Percentage of staff with ERM responsibilities that have undergone ERM training • Number of risk identification exercises completed • Number of ERM communications For an organization to understand how it is performing overall in risk management, it should benchmark itself against other organizations as well as best practices. Also, organizations should share best practices with one another inside and outside of the aviation industry. 7.2 Staff Development The knowledge and skills of those engaged with the ERM process need to be kept up-to-date and continuously improved in line with best practice. These skills will vary by role and responsibility, but may include risk identification, project management, recording and reporting information, and communication. It is important to ensure that processes are in place to identify skills or knowledge gaps and initiate training to address these. Personal development discussions, formal feedback loops, and/ or the risk champions may be useful in identifying gaps. 7.3 Hints and Tips to Sustain ERM It is important that the investment made to implement ERM continues to add value. Table 10 provides some hints and tips to sustaining ERM. Continuous Improvement and Sustainability

continuous improvement and Sustainability 51 Lesson Comments 1. Put someone in charge w ho has credibilit y and clout ▪ Developing and implementing ERM requires a significant investment of time and resources. Be prepared to back this up by ha ving the appropriate person leading the process ▪ The individual should have respect wi thin the airport and the visible support of the CEO and/or board ▪ They should have the authority to make decisions and deploy resources as necessary ▪ They should understand w hat is required t horoughly, be an engine for change in the organization, and be prepared to follo w through 2. Secure and maintain executive support— participation drives buy-in ▪ Without visible support and participation from senior executives, the process wi ll fail ▪ A named process sponsor should be in place and be w illing and able to communicate with others about the process ▪ There ma y be benefit in having a process steering group in place that monitors progress and can wo rk to remove or overcome barriers 3. Engage wi th the business earl y and continually ▪ Spend time up front underst anding the airport ’s needs ▪ The ERM process as a wh ole, its inputs and deliverables, will be a better fit for the airport if the airport departments are involved from the onset and can validate the proposed approach ▪ Involvement of employees wi ll better enable correlated risks to be identified and emerging risks to be spotted ▪ Involve departmental representatives in any technology selection or development process; half of the battle is user acceptance ▪ Agree on the content and format of reports and other deliverables before “going live” 4. Demonstrate the value of ERM throughout ▪ The greatest obstacles wi ll arise if employees perceive no value in the process ▪ Set KPIs to track success ▪ Reinforce the message throughout the project life-c yc le. Provide ans we rs to “Why are we doing this? What’s the value?” ▪ Develop and present a vision of wh at the end-state wi ll look like (e.g., fewer losses, greater certainty, strategic positioning) 5. Start simpl y and be realistic ▪ Have a vision and spend time planning w here yo u wa nt to get to ▪ Start wi th the things that are simple to implement and easy for departments to understand and perceive value in (e.g., risk identification and mitigation) ▪ Ensure that sufficient time and resources are available ▪ Ta ilor the approach to existing operations and processes ▪ Do not attempt to go to detailed quantitative analysis if it is not required 6. Use language people can understand ▪ Avoid the use of jargon wh erever possible ▪ Use terminology that is consistent wi th best practices; it wi ll help wh en communicating outside the organization ▪ Explain all terms used and take time to ensure that they are understood and used consistentl y across the organization 7. Don’t be afraid—it wo n’t be perfect the first time ▪ Make a start; doing something is better than doing nothing ▪ Be realistic in your expectations of early results ▪ Expect that yo ur first results may not be completely accurate ▪ Refine and improve over time 8. U se technology early to get value from the data ▪ Do not make the mistake of letting the technology determine the outcome, but don’t avoid the use of technology ▪ It is better to adjust your process so me wh at than not use technology at all ▪ Spend time det ermining wh at you really need ▪ There are many options and solutions; choose the one that fits best ▪ Use technology to make data gathering more efficient and analysis and reporting more flexible and useful Table 10. Hints and tips to sustain ERM. (continued on next page)

52 Application of enterprise Risk Management at Airports Lesson Comments 9. Make reports simple and easy to understand ▪ Less is more; the marginal value of additional detail declines steeply ▪ Validate the format and content of reports w i th the people who w ill use them and customize them for their audience ▪ Deliver information electronically w henever possible ▪ Align risk reports to other business reports whenever possible 10. Keep the process alive; don’t let it gather dust ▪ Th ick, paper-based reports find a home on the shelf ▪ Follow through on actions relentlessly ▪ Improve the process over time ▪ Keep employees and the board interested ▪ Communication and expectations must travel both up and do w n the airport hierarchy ▪ Celebrate success Table 10. (Continued).