Succession Planning and ERM — What’s the Connection?
For nearly 20 years I have been conducting risk workshops to help public sector and K-12 organizations identify key risks. In every one of those workshops — regardless of the type or size of operation — succession planning is always one of the top risks. The details vary a bit by sector, but the key elements always include finding, hiring, and training the right successors and ensuring the transfer of knowledge.
The documentation of policies and procedures, cultivating understanding among multi-generational workers, and changes in workplace culture are often raised as adjacent concerns, which illustrate the deeper issues that may be uncovered during the process of planning for new leadership.
The Association of Governmental Risk Pools (AGRiP) recently reported that there are more pool job openings today than at any other time in their 23-year history. We've all heard the statistic that 10,000 baby boomers are retiring every day; we can look around the country and see evidence of that playing out among pools, as well. It's not only the retirements of baby boomers that create job openings, though. Many sectors are reporting early retirements and job re-configurations resulting from the pandemic. That broadens the scope of risk associated with succession planning as pools compete for skilled employees.
Succession planning is so much more than hiring a new boss. It may trigger changes to structure and strategy as well as leadership of the organization. The term "leadership" is used intentionally here because succession planning does not apply only to a pool's CEO position; it also includes other key positions (such as CFO, COO, Risk Managers, and key risk control personnel) as well as Board leaders.
There is no question that succession planning is necessary for pools, and for many, it is a key risk. Every pool will experience the need for new leaders; without appropriate planning and the consideration of risk, it may put a pool's future in jeopardy. The principles and processes of enterprise risk management (ERM) can be extremely helpful to pools facing these challenges.