Experiences from Collaborative Enterprise Risk Management with Inclus
Prioritizing inclusivity and engagement, Purmo Group has developed a comprehensive enterprise risk management (ERM) approach that aligns with the needs of a publicly listed company. The journey from non-harmonised and informal practices to a collaborative framework illustrates the importance of aligning definitions, processes, and action plans.
Introduction
Purmo Group is one of the leading suppliers of sustainable indoor climate comfort solutions in both hydronic and electrical forms. Purmo Group’s heating and cooling systems are designed to offer the highest levels of comfort and efficiency.
Purmo Group's production spans 23 countries, and it sells products in over 100 countries worldwide.
Presenting at Inclus’ breakfast seminar was Tuomas Laine, Head of Strategy Deployment and Enterprise Risk Management of Purmo Group.
Background for risk management at Purmo Group
Purmo-Tuote Oy was established in 1953, and it was acquired by Rettig back in 1970. Within Rettig, risk management was crucial for ensuring the security of family’s assets now and in the future.
When Purmo Group was publicly listed on the main market of the Helsinki Stock Exchange in 2022, the need to comply with listed company requirements became a priority.
In the area of risk management, this necessitated for instance the implementation of standard processes, an annual calendar, and clearly defined responsibilities.
Previously, risk management was based on local practices with little central oversight.
Tuomas Laine explains: “Inclusivity and engagement became priorities, as we wanted to move from a narrow, top-management-driven approach to involving a broad range of stakeholders from different parts of the organization.”
He continues: “We selected Inclus as the risk management tool to first and foremost facilitate this broader engagement. At the same time, we also thought it was important to have a dedicated tool for risk management that we could use for not only collecting and storing information but also to produce robust support to our analytical conclusions and action planning.”
Roadmap to inclusive collaborative risk management
Launching into performing risk analysis rounds with Inclus, it was recognized at Purmo Group that perceived risks varied greatly depending on who was assessing them, highlighting the importance of considering both global and local perspectives.
The need to standardize and align the vocabulary was also a crucial observation: Particularly the key concepts such as 'likelihood' and 'impact' were not necessarily that clear to all participants at first, and Purmo Group worked to develop a shared understanding of terminology that was used.
Initial training sessions demonstrated how assessments and perspectives could influence risk management outcomes, ensuring that all stakeholders were on the same page.
Temporary bias towards compliance risks over strategic risks
Over time, Purmo Group noticed an evolution in risk perception.
Says Tuomas Laine: “Two years ago, we noticed that compliance risks dominated the top of the list in our risk assessment results, while strategic risks, somewhat counter-intuitively, seemed less important.”
“This discrepancy was largely attributed to timing: compliance issues were at the forefront due to the company's stock listing in 2022 when we started, temporarily overshadowing strategic risks. However, as the awareness and understanding improved about our company-wide risk management efforts, strategic risks became more prominent”, Laine continues.
Repetition, continuous learning, and adjustments to process
Purmo Group emphasizes action-oriented risk management, believing that value is only realized by taking action based on risk assessments and integrating risk management into daily operations.
“While documentation remains important, action must occur at the operational level. The approach is to ensure that risk mitigating actions are in the agendas of the functions responsible for them rather than as a separate risk management process”, Tuomas Laine emphasizes.
Continuous improvement and iteration are fundamental to Purmo Group's risk management practices. Repetition and learning curves have proven essential in refining the process.
While baseline global risk management updates are conducted annually, country risk management and business impact analyses are carried out throughout the year.
