Operational failures, cyber threats, and non-compliance can bring operations to a standstill. That’s why it’s essential to manage risks with effective monitoring and mitigation strategies. You can’t achieve this kind of visibility and mitigation capability without a robust ERM framework at the center.

Many organisations still rely on fragmented, spreadsheet-based tracking. Others have risk registers, policies, and controls — but lack a cohesive framework that connects risk management to strategy and drives accountability. A best-practice ERM framework provides the structure and processes an organisation needs to identify, assess, prioritise, and manage risks — helping achieve objectives efficiently and consistently. It establishes a foundation for consistently understanding, managing, and communicating risk across the entire enterprise.

Only when you have a strong framework in place will tools like ERM software truly help you manage and safeguard your organisation. By using out-of-the-box templates, workflows, and forms to automate key steps, the solution embeds risk management into daily operations.

To get the best out of their ERM programmes, risk managers need to understand what an ERM framework is, why it matters, and how to set one up correctly to gain better visibility of risk and guide informed decision-making.

What is an ERM framework?

An enterprise risk management framework is a structured approach your organisation can use to identify, evaluate, address, and monitor risks that could impact your strategic objectives.

Traditional risk management often focuses on isolated issues such as operational, compliance, or IT risks. In contrast, ERM provides a cross-functional view of the entire risk landscape, empowering you to integrate risk into decision-making. ERM ensures that leadership sees both threats and opportunities in relation to their strategic choices.

A successful framework empowers your leadership to take calculated risks that drive business growth. It helps you understand your risk appetite, focusing budgets and resources where they’ll have the most significant impact.

Key Components of an ERM Framework

While no two organisations are identical, industry-standard ERM frameworks include these core areas to ensure consistent, enterprise-wide risk visibility.

1. Governance and Oversight

Define clear roles and responsibilities for managing risk at every level, from the board and executive team to individual risk owners. Establish a risk committee or governance structure that oversees your organisation’s risk management function and holds risk owners accountable.

Foster open communication about risk. Build a risk-aware, resilient culture by ensuring leaders model transparent and responsible risk-taking behaviours while encouraging employees to raise concerns early.

2. Risk Identification

Identify risks across all categories — including strategic, operational, compliance, IT, cyber, reputational, third-party, and emerging risks. Capture and document each risk in a centralised risk register to ensure consistency and visibility. Connect teams from across the business to identify the full scope of risk and uncover interdependencies.

3. Rating and Categorisation

Categorise and rate risks by likelihood and impact using a consistent scoring model.
Set key risk indicators (KRIs) and tolerance levels to stay within your risk appetite.
Use heatmaps, KRIs, and risk scores to prioritise risks and focus attention on the most critical areas.

4. Controls

After identifying, rating, and categorising key risks, implement controls to keep risk within the tolerance levels defined in your risk appetite. Controls can take many forms, including policies, procedures, training, awareness programmes, and regular monitoring or checks. Test controls regularly to ensure they work effectively to prevent the intended risks. Address control gaps promptly to build your organisation’s confidence in your program.

5. Risk Monitoring and Assessments

Monitor risk levels through regular reassessments and by analysing operational data related to key risk indicator trends. An effective ERM framework alerts the relevant risk owner immediately when risk levels are rising or exceeding tolerance levels.

6. Incidents, Hazards, and Near Misses

Act quickly to resolve incidents and capture hazards and near misses before they escalate into significant events. Give your team a clear way to report issues. Use process workflows to ensure that each concern is escalated and addressed by the appropriate teams.

Incident reports from frontline staff offer vital insight into potential risks that might otherwise have been overlooked, which can be easily added and tracked within your risk register.

7. Risk Response and Mitigation

Decide how you intend to handle each risk on the risk register — through mitigation, transfer, acceptance, or avoidance. Typically, organisations:

  • Mitigate risks by strengthening controls.
  • Transfer risk through insurance or contracts.
  • Accept risks when within tolerance.
  • Avoid risks by modifying or discontinuing high-risk activities.

When risk levels rise, your ERM process should prompt you to document mitigating actions. This data capture maintains a complete record of how risks are resolved. It also ensures outstanding actions are tracked and completed within a reasonable timeframe. Capturing risk mitigation steps supports audits and drives continuous improvement, helping to reduce risks further should levels rise again.

8. Monitoring and Reporting

Your ERM framework should give you clear reports on risk exposure, control effectiveness, KRIs, and mitigation status. Successful ERM programmes use heat maps, bowtie analysis, and risk exposure and control effectiveness reports to construct a comprehensive picture of risk and how the organisation is controlling it. These reporting outputs provide leadership teams with actionable insights, such as information on trends and future exposures, enabling them to make faster and more informed decisions.

9. Strategic Planning

ERM frameworks provide a structure that enables you to link risks to your strategic objectives. First, you must plan out your strategy and break it down into smaller programmes, projects, tasks, and actions. This structured approach will help stakeholders understand their role in achieving the plan. Strategic risks must be identified and added to the risk register so you can manage them actively through effective controls and measures. Integrating risk and strategic planning enables you to take informed, calculated risks in pursuit of your strategy with awareness of the potential outcomes.

10. Continuous Improvement

The most mature ERM programmes continually evolve to enhance efficacy through ongoing feedback, analysis, and reflection. This continuous improvement enables them to identify new and emerging risks and enhance controls in areas of weakness. Well-developed ERM frameworks provide a structure for analysing lessons learned, refining processes, and adapting to changing conditions. Software helps implement these updates at scale, maintaining agility and transparency.

Key Steps When Setting Up Your ERM Framework

Whether you’re building an ERM framework from scratch or modernising an existing one, make sure that you follow these steps when setting up your program.

Step 1: Secure Leadership Buy-In

Your ERM framework requires budget, resources, and strategic direction; therefore, it will only succeed with executive and board-level support. Define your organisation’s goals, risk appetite, and tolerance levels to align directly with strategic objectives.

Step 2: Assess Your Current State

Examine your current risk-related processes and interactions. Even without a defined ERM framework, you will likely find risk owners managing some risks on an ad hoc basis. You will also find that some controls already exist, functioning as part of normal business processes.

If you already operate within an ERM framework and are looking to make improvements, identify gaps, overlaps, and areas that lack consistency. Clean and standardise your existing risk data before integrating it into any new ERM framework or software.

Step 3: Define Outputs and Reporting Requirements

Collaborate with leaders and stakeholders to understand the types of reports and insights they would like to extract from the ERM framework. This partnership ensures the process you set up captures the correct data to produce insightful reports that resonate with business leaders and drive action. Align with relevant standards, such as COSO, ISO 31000, CPS 230, and Basel III.

Step 4: Design the Framework

Develop a consistent risk taxonomy — a clear structure for how you categorise and rate risks across the entire enterprise. Decide on risk assessment criteria and establish escalation and remediation workflows. Keep your framework scalable and straightforward. A well-designed framework improves adoption and consistency across departments.

Step 5: Test and Refine

Test your framework in one business unit or risk category before rolling out a complete implementation to confirm usability and value. Incorporate feedback to fine-tune processes and reporting.

Step 6: Roll Out and Embed

Roll out the ERM framework across the organisation with clear communication, comprehensive training, and structured roles and responsibilities. Embed ERM into planning, budgeting, and performance management so it becomes part of daily business operations, not a standalone exercise.

Step 7: Automate and Integrate

ERM programmes that rely on spreadsheets and manual processes can only remain effective up to a certain point. As the framework matures, your program’s accuracy and ability to scale will depend on your ability to automate processes effectively. Implementing ERM software automates workflows, aggregates data, and streamlines reporting to eliminate administrative tasks and provide a complete overview of risk exposure. Automation ensures consistent data, faster insights, and better decisions across the enterprise.

How ERM Software Automates Your ERM Framework

Managing your ERM framework manually is time-consuming and prone to error. Spreadsheets, emails, and static reports simply can’t keep up with today’s complex risk environment. Leading organisations rely on ERM software to systematise the entire risk management lifecycle, from identification to reporting and beyond. This structured approach saves time, enhances consistency, and improves transparency.

These steps will guide you in automating your ERM framework with software to achieve better efficiency, insight, and control.

Build a Digital Risk Register

ERM software enables you to establish a digital risk register, ensuring that every risk is captured, categorised, and actively managed. You can set up multiple risk registers, which consolidate into an enterprise-level view of risk.

Start by bulk uploading existing risks. You can then add new risks using online forms, with fields that capture key information such as description, category, and type (e.g., strategic, operational, compliance, IT, third-party). This structured data allows the register to be easily sorted, filtered, and analysed.

For each risk, log the likelihood, impact, key risk indicators (KRIs), and tolerance thresholds, ensuring alignment with the organisation’s risk appetite. The organisation assigns risk owners by linking to the organisation’s active directory, so ownership is automatically updated as staff roles change. Automatic escalation rules alert risk owners when risk levels exceed their defined thresholds, enabling them to take immediate action and document recovery steps.

You will also be able to record the frequency of risk assessments and reviews for each risk, ensuring timely monitoring and mitigation. The digital register keeps all risks traceable, current, and visible to the appropriate stakeholders, supporting informed decision-making across the organisation.

Automate Risk Assessments

ERM platforms allow you to design and customise multiple types of risk assessment templates, tailoring them to your specific assessment criteria. You can design forms to dynamically adapt based on the risk type or category, ensuring relevant questions and scoring criteria are always captured.

Use your ERM software to schedule risk assessments at regular intervals. Automated workflows notify you of due and overdue assessments and escalate missed deadlines. Staff complete assessments via online forms, with all data feeding directly into the system. This constant feed of real-time data instantly updates the overall risk profile and heatmaps.

Automated Risk Monitoring

Whenever KRIs cross their pre-determined tolerances, the system notifies risk owners. These live alerts enable risk owners to investigate and implement additional controls and mitigation measures where required.

Modern ERM platforms connect via API integrations to other business systems, such as finance, HR, incident management, or operational data sources. These integrations automatically feed performance and risk data relating to KRIs into the ERM system. This linkage enables live monitoring of risk levels based on operational data.

When metrics linked to KRIs indicate a rising risk, such as a spike in incidents or missed KPIs, the system alerts the relevant risk owner and updates the dashboards instantly. This live data feed enables leadership to view updated risk exposure in real-time.

Set Controls and Automate Control Testing

Once you have assessed your risks and established your monitoring capability, you can use the ERM platform to create a comprehensive control library. Capture objectives, descriptions, owners, test frequencies, types (preventive/detective), and evidence requirements for each control. This comprehensive data ensures proper design and effectiveness tracking of controls.

Map each control to the relevant risks in the system. Mapping enables teams to visualise how specific controls impact multiple risks, providing an understanding of interdependencies and the overall effectiveness of controls.

Once controls are in place, you must monitor their effectiveness to ensure they are working as intended. ERM software can automate control checks and testing. Schedule tests and checks at regular intervals or upon specific events, such as system updates or new regulatory requirements. When a test or check is due, the system notifies the relevant staff, allowing them to enter the details into the platform. The system sends automated reminders for incomplete checks and notifies risk owners of any failed or ineffective controls that need addressing, ensuring accuracy and completeness.

As staff enter test results, leaders can track pass/fail rates and generate reports instantly that show trends and control performance over time. Continuous validation ensures controls remain effective and provides management with real-time visibility into performance.

Capture Mitigation Actions

When a risk exceeds previously defined thresholds or KRIs, record mitigation actions in the platform. The system sends prompts to add key information required for each action, including:

  • Brief description of the corrective or mitigating measure.
  • Responsible owner
  • Deadline and priority level
  • Status and supporting evidence.

The system maintains a comprehensive audit trail of actions, ensuring accountability and supporting regulatory compliance.

Personalised Dashboards

The platform supports all stakeholders, from frontline staff performing control checks to board members reviewing enterprise-wide risk insights.
Each user has a personalised dashboard showing their actionable items, such as:

  • Upcoming risk assessments
  • Overdue control checks
  • Notifications of rising risk levels linked to KRIs or thresholds
  • Summaries of risk exposure within their business unit

Senior leaders and board members have access to strategic dashboards that provide deeper analytics and enterprise-level metrics. These insights support informed decision-making throughout the organisation.

Audit Trail and Accountability

Every action, update, or change in the system is traceable to the user, creating a complete audit trail of who did what and when. This transparency supports corporate governance requirements and ensures accountability. It also provides defensible evidence for regulators, auditors, and stakeholders.

Many software platforms integrate with Active Directory or single sign-on (SSO). This synchronisation provides staff with access based on their role and department, ensuring that user access updates automatically when staff roles change. Permissions hierarchies safeguard sensitive data, limiting staff views to show what is relevant for their role.

Automated Reporting and Real-Time Analytics

When you implement your ERM framework using software, all reporting is automated. An ERM platform eliminates the need to manually compile data from multiple spreadsheets.

With a single click, users can generate a variety of standard and customizable reports including:

  • Risk register summaries and risk exposure reports
  • Control effectiveness reports
  • Heat maps and trend analyses
  • Bowtie analysis visuals
  • Interactive dashboards in Microsoft Power BI

Reports update in real time. You can view current risk status, overdue actions, failed controls, and performance against risk appetite. Most platforms offer a variety of out-of-the-box reports that you can further customise to align with your organisation’s specific reporting requirements.

Best-Practice Templates and Configurability

Most enterprise-grade ERM platforms offer prebuilt risk registers, control libraries, workflows, and templates. These standards typically align with guidelines such as ISO 31000, COSO, and APRA CPS 230, enabling you to quickly align your processes with recognised best practices.

These ready-to-use frameworks enable fast setup and ensure efficiency. Workflows, forms, and reports are fully configurable, empowering you to tailor the system to align with internal terminology or reporting needs. This flexibility also enables you to evolve ERM processes without starting from scratch and keep pace with changing regulations.

Link Risk to Strategic Objectives

Advanced ERM software extends beyond risk management to incorporate strategic planning and performance tracking. Leaders define high-level strategic goals in the platform and break them down into smaller programmes, projects, and tasks needed to achieve the overall strategy. Document the strategy in the system, assigning clear ownership to tasks. This structured approach allows you to adjust strategic plans quickly when risk exposure or external factors change. Easily update timelines, budgets, tasks, and actions. The system notifies the relevant owners, ensuring everything remains on track and the right stakeholders are informed.

Assign owners, deadlines, and budgets for each task. As staff complete each action, the system tracks progress at every level of the plan. This visibility ensures accountability and helps leadership see how each activity contributes to strategic goals.

Each objective links back to performance data and relevant risks. This mapping enables your organisation to track if strategic initiatives are progressing as planned and if the strategy is delivering the desired results. By integrating strategy with risk and performance data, leadership can make informed decisions about where to invest and adapt.

Why Automation Matters

Digitising your ERM framework with software eliminates inefficient, manual, spreadsheet-based processes. ERM platforms have evolved into business systems that staff at all levels use to integrate risk management into their daily work. This holistic approach broadens the scope of risk management. It reduces administrative effort and ensures that risk information flows instantly from the front line to the boardroom.

ERM software transforms your risk management framework into a dynamic system that structures data capture and automates tasks. ERM software enables a shift to proactive, insight-driven risk management, ensuring that risks are identified and addressed promptly. The data empowers decision-making at all levels of the organisation.

Tips for Building a Sustainable ERM Framework

  • Start with what matters most. Focus first on high-impact, strategic risks to align risk priorities with business goals before tackling every minor issue.
  • Create a common risk language. Standardising terminology, categories, and rating systems ensures risk information is comparable across the enterprise.
  • Foster a risk-aware culture. Provide guidance empowering employees to identify and escalate risks, incidents, hazards, and near misses promptly.
  • Link risk to performance and objectives. By linking risk to performance and objectives, leadership can use risk-based insights to plan the strategy, drive smarter decision-making, and guide resource allocation.
  • Keep improving. ERM requires continuous improvement — conduct regular reviews, perform scenario planning, and act on lessons learned to keep your ERM framework adaptable and relevant.

Turning ERM into a Strategic Advantage

A successful ERM framework is more than a document — it should be a living system that connects risk to strategy and performance. Having the right structure and tools in place enables you to capture the required data, understand risk exposure, and focus mitigation efforts on the highest-impact risks.

If you’re ready to automate and strengthen your ERM program, software can help you build a best-practice framework. Automating risk management enables you to allocate more time to analysing risk data and driving better business outcomes, rather than managing risk processes.

For more information on enterprise risk management, download our ebook, From Data to Decisions: Engaging Everyone in Enterprise Risk Management for Business Success, and check out Riskonnect’s ERM software.