Leave it to an engineer to crystallize one of the toughest challenges companies face after putting in place an enterprise risk management (ERM) approach.

“Any system that is set in motion requires some energy to keep going,” notes Trinidad and Tobago-based Phoenix Park Gas Processors Limited (PPGPL) President Eugene Tiah (a former engineer who also earned his MBA). “For this reason, we are committed to sustaining our effort and continually improving our ERM capabilities over time.”

Tiah and Dominic Rampersad, Phoenix Park vice president of finance and information technology (IT), spoke to me at length last month about their ERM journey. The results of these conversations and other research can be found in this case study.

I’ll include more information about Phoenix Park’s impressive effort in future posts.

The company – which employs approximately 180 people, posts annual revenue of about $700 million and is jointly owned by NGC NGL Company Limited, ConocoPhillips Inc., and a GE Energy Financial Services company (10 percent) – undertook a formal ERM effort in 2008 to achieve three objectives.

These objectives continue to guide the ongoing effort today:

(1) Make ERM a sustainable effort that permeates the entire organizational culture;

(2) Integrate risk thinking (i.e., risk identification, risk assessment, and risk information) into every decision-making process at every level of the organization; and

(3) Leverage identified risks as opportunities to add value to the organization through innovation and continuous improvement.

“Every decision we make,” he explains, “from the lowest level in the organization right up to the highest level of governance at the board level, is steeped in risk: What are the risks? What are acceptable levels of risks? How do we manage those risks within a desired level? How do we transfer other risks? What are suitable mitigations? This approach to risk will help us make better decisions … and ultimately add value to the organization. If we are excellent with ERM, it positions our business for excellence.”

The sustainability that PPGPL sought required the common risk language that Tiah describes – and this new language is helping the company to stave off “ERM entropy” and achieve business excellence. ###