Updated: Jul 8, 2021
Are you wondering what the difference is between an ERM consultant and a business consultant? Both of these professionals work to help businesses strive and stay successful, but they do so in different ways and with different focuses.
To learn more about what these professionals do, as well as how they differ, keep reading. In this guide, we will let you in on what each kind of consultant does for a business so that you can find the best option for your needs.
Enterprise Risk Management (ERM) Consultant: The Basics
An Enterprise Risk Management or ERM, Consultant works to help companies understand and address potential risks, how they interrelate and influence each other, and more importantly, how they ultimately affect the execution of strategy. The word ‘enterprise’ means that this process is applied across the entire organization to facilitate better resource allocation, navigate emerging changes, and support key decision processes.
Think of ERM as a discipline versus the function or department of traditional Risk Management. The purpose of ERM is to expand the organization’s understanding of risk beyond hazard loss events or insurance; the ultimate purpose is to support better decision-making by revealing where risks across the organization are interconnected, often combining in a manner that creates far greater impact than the individual risks alone. To do this, we must define a framework for how risk across the organization is identified, measured, and reported such that these connections can be made.
ERM professionals assist organizations in identifying, assessing, and prioritizing high-impact operational exposures and strategic risks. This may involve evaluating your current risk management structure and looking for areas in need of improvement or by creating an enterprise risk management plan for you.
The ultimate purpose of ERM is to support better decision-making by revealing where risks across the organization are interconnected, often combining in a manner that creates far greater impact than the individual risks alone.
This allows for a structured approach to assess risks specific to your company and industry. Potential risks will be identified, collected, and categorized in order to figure out which risks (or groups of risks) take priority.
Risks Analysis, Evaluation, and Reporting
Risks analysis, evaluation, and reporting are all essential steps in the ERM process. Analyzing your company's risk portfolio allows you to better understand the impact they may have on your organization and your goals. An ERM consultant has many tools to assess and develop mitigation options, or even model risks and their variants to provide a predicted analysis of the impact those mitigation strategies are expected to have.
This allows you to determine the best areas for resource and capital allocation considering also the upside that certain risks may have on your organization. A consultant will help you figure out which course of action is best for handling risks, which will typically include avoiding the risk, accepting it, managing it, or leveraging it. Regardless of the plan of action that is decided on, implementation of that action will then need to be developed.
Risk treatment options will be evaluated so that you can have access to their projected costs and benefits before you begin implementing the risk mitigation strategies. Managing risks across an entire organization takes expertise and coordination, which is exactly what an ERM consultant is there to assist with. The data found in the risk assessment and analysis need to be shared with the right people at the right time in order to make the best decisions for the company.
In many cases, technological updates are a suggested part of the consultant's risk management plan. A consultant can help you implement these new technologies and processes in a way that is seamless and effective.
Business Consultants: The Basics
While an ERM consultant has expertise in the specific field of risk management, a business consultant will likely have a more general level of expertise when it comes to helping companies. A business consultant can work with clients on various aspects of their organization, from strategy and business planning to problem-solving techniques. They can provide information and guidance that can help business professionals master skills in their industry.
These consultants are basically advisors for leadership. Some may have specific expertise in certain areas of business that can help companies solve certain problems or get advice on how to handle certain areas of their business. Similar to an ERM consultant, a business consultant will work to analyze and create solutions that can help companies reach their goals.
Managing risks across an entire organization takes expertise and coordination, which is exactly what an ERM consultant is there to assist with.
Using their knowledge and skill set, a business consultant can work to identify problems and come up with solutions. They will implement certain changes that can improve certain processes or practices within an organization. This allows for a third-party professional who can provide constructive criticism, train or teach employees improved tactics, or even eliminate staff or processes that are not effectively contributing to the company.
Businesses That May Need Consulting
Businesses in all types of industries can benefit from a general business consultant or an ERM consultant at certain points of their evolution. Many new companies may hire a consultant right off the bat to help them streamline their efforts and build a sturdy foundation for their business. This can help with accounting, developing processes and departments, as well as working to hire talented staff members.
However, existing businesses can benefit from hiring a consultant just as much as start-ups. This is especially true of businesses that are trying to grow, evolve, or expand into other industries. A consultant can help companies and their leaders figure out areas that will need to change or evolve to make room for growth.
Additionally, if a company is facing issues financially or with its reputation, a consultant can assist in finding a solution before it's too late. Both business and ERM consultants work to help companies reach their goals while growing their profits. Hiring a professional business consultant can help any company, at any stage, but it's best to find a consultant that specializes in your specific area of need.
ERM Consultants: A Specialized Business Consultant
When it comes to the difference between an ERM consultant and a business consultant, it all comes down to areas of focus and expertise. Overall, an ERM consultant is a business consultant that specializes in risk management.
Are you looking for specialized business consulting services?
If so, contact us today for expert advice on risk management, organizational resilience, and much more. At Black Fox Strategy, we have deep expertise in strategy, risk, and resilience – a combination you won’t find very often.
We assess and design ERM programs that are balanced for the size and complexity of the organization, ensuring that these programs ties to and support your strategic objectives, providing both best practice and functional value.