The R-PMTM System – a Measurable ERM Process

The R-PM™ Advantage

Powered by ARQ™, the rPMSolutions’ Risk & Performance Management System  (or R-PM™) combines the benefits of both risk and performance management; creating a single process/system that gives you the insight you need to accelerate your business performance and keep ahead of today’s rapidly changing business environment. R-PM™ leverages ARQ™ to make company results much more clear and understandable, better guiding decision-making – supercharging your company’s bottom-line. It is also a practical approach that re-engineers your Enterprise Risk Management (ERM) program by inserting the important dollar quantification element that speaks the language of the C-Suite. This assures the ERM program will perfectly align with Strategic Planning and produce and demonstrate measurable results. With R-PM™, your ERM program makes your organizations’s success the focus, not just risk assessments and compliance – becoming an essential part of your company’s ability to have a clear advantage to move and stay ahead of competition.

The R-PM™ System – ERM Engineered for Performance.™

R-PM™ is the first risk-based system that creates a continuous management process around a definitive “hard-dollar” measure – ARQ™. With ARQ™ three concepts can converge as one: performance targets, risk and results. This advances ERM from an esoteric concept to a “real” performance-based discipline – informing and directing your decision-making for superior results. R-PM™ re-engineers the conventional 4 step risk management process of Risk Identification & Analysis, Risk Response Planning, Response Plan Deployment, and Risk Monitoring into a 4 phased ERM Strategy directly linked to planning and business performance review.

ARQ™

At the heart of the System, ARQ™ is the super-charged engine powering R-PM™. The patented ARQ™ cost accounting business method makes it possible to create a “5th Financial Statement” – the ARQ™ Statement of Enterprise Total Cost of Risk™ (or the ARQ™ Statement of ETCOR™). The ETCOR™ Statement organizes, quantifies and reveals important risk information previously lost in your general ledger – your actual dedicated and discrete risk management costs, along with your monitored and recorded risk events. Added to this, we apply the ARQ™ method of quantifying the impact of risks that are not directly recorded in the general ledger. The ARQ™ Statement of ETCOR™ is utilized in every aspect of the R-PM™ System.

Assessment & Planning

The first phase of the R-PM™ System combines Risk Identification & Analysis and Risk Response Planning with ARQ™ to create a single process. Unique to R-PM™, the Assessment & Planning phase demands that risks and response plans be quantified in dollar terms. This new “Phase 1” process includes 4 steps: 1) a Baseline Analysis of Cost of Risk (BCOR); 2) Risk Identification and Analysis; 3) Risk Response Plan Development; and 4) the creation of an ETCOR™ Forecast or Target.

The BCOR analysis leverages ARQ™ and ARQ Technology™ to decipher and create Statements of ETCOR™ for any period from your company’s inception to the present, or for a reasonable number of historical periods (enough to create a reliable trend). The ETCOR™ amount is divided by revenue to create an ARQ Index™ that illustrates the common-sized ETCOR™ for each period, which can be trended over time. This step determines your company’s inherent areas of risk and exposes problem areas upfront.

Upon the completion of Phase 1, you should have a thorough understanding of the specific risks and root causes, a well thought out Risk Response Plan/Strategy, and most importantly, an ETCOR™ Forecast or Target representing each of these with regard to cost and effect on your budget and performance.

Managed Implementation

The Managed Implementation Phase of the R-PM™ System, using ARQ™, builds a bridge between Risk Response Planning and Response Plan Deployment. This creates a much more practical and measurable methodology that provides factual feedback to immediately act upon while deployment is underway.

ARQ Technology™ automates the ETCOR™ Accounting process, enabling real cost monitoring of your Risk Response Plan implementation as it happens. It also, tracks broader ERM performance within the system, exposing new or emerging risks as they happen – providing the evidence you need to revisit the process and revise the ETCOR™ Forecast before Risk Response Plan implementation is complete. In other words, in a R-PM™ System strategy, Risk Response Plan Deployment is no longer just a governance exercise – where the focus is solely on completion. No, it is re-engineered to be performance oriented; where the actual cost of deployment is monitored and the cost of actual risk events (consequences/issues) are captured as they occur. Governance is important, but Risk Response Plan efficiency and effectiveness are more important. With ARQ Technology™, the real time production of Statements of ETCOR™ is now possible – creating an ERM strategy that places “performance” ahead of “compliance”.

Measured Performance

The next Phase of the R-PM™ System leverages the definitive ETCOR™ Accounting process made possible with ARQ Technology™ – ERM performance is no longer theoretical and anecdotal, but measureable and results-oriented. The R-PM™ System, expands the “Risk Monitoring” step to include historical risk events (or performance events). By leveraging ARQ Technology™, the completed Risk Response Plan Deployment and results can now be compared with the ETCOR™ Forecast developed in the Assessment & Planning Phase. Actual risk events (consequences/issues) are identified and compared to the risks identified and analyzed in Phase 1. Actual deployment costs are tracked and compared to the ETCOR™ Forecast. All of this expands the notion of “Risk Tracking” to a Measured Performance process that can direct quantitative analysis, decision-making and resource allocation.

ARQ™ IS the ultimate risk monitoring tool. The R-PM™ System capitalizes on this capability and combines ARQ™ itself with the wisdom gained from the other system components to create a customized dashboard and scorecard (including Key Risk Indicators) in perfect alignment with the key sources of risk affecting your performance.

Quantitative Feedback

Lastly, this ARQ™ inspired ERM strategy enables a whole new process that provides the analytics needed to assure real performance improvement and enhanced decision-making – Quantitative Feedback. This Phase feeds the continuance of the ERM strategy with precision data. By analyzing the Statements of ETCOR™, the real cost trade-offs that exist between risk response and risk exposure is made clear. Actual events (consequences/issues) are also analyzed for frequency and trend. The ARQ Index™ is graphically analyzed and trended over time to create an overall ERM performance gauge. Specific inherent risk exposure areas can now be illuminated and analyzed regarding both: resource allocation & event occurrence; and the predicted outcomes of anticipated events. These analytical methods are unique to this R-PM™ System and work to create a world-class approach to ERM that is defensible on facts not theory, governance or compliance.

ERM Engineered for Performance™