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Challenges and Obstacles of ERM Implementation in Poland

ZBIGNIEW KRYSIAK, PHD

Associate Professor of Finance, Warsaw School of Economics, Poland

SLAWOMIR PIJANOWSKI, PHD

President, POLRISK Risk Management Association, Poland

This research is about the status of enterprise risk management (ERM) implementation in Poland's companies. We analyze the challenges and obstacles to a more mature stage of ERM rather than a compliance- or governance- driven one. Poland, after the transition into the free market economy in 1989, became open to the knowledge and transfer of the best practices from around the world. Since 1995, with the publication of AS/NZS 4360 and COSO II in 2004, as well as easy access via the Internet, it seems that theoretically there should not be a delay in implementing modern risk management (RM) processes in Poland. While there is contact with authors and thought leaders taking part in the creation of various ERM standards, and with some professionals implementing ERM in various companies, barriers still exist. These barriers are due to geographical distances, language differences, budget constraints, a lack of awareness, or other business priorities. We (the authors) first heard about AS/NZS 4360 in 2004 while looking for inspiration from various standards to improve risk assessment methodologies for our companies. In 2004, the aforementioned standards were translated into Polish and published in the Polish Ministry of Finance's Orange Book Risk ManagementPrinciples and Concepts. A similar publication had also been done earlier by the UK Ministry of Treasury, and another handbook of risk management for the audit department, which included descriptions of some risk management tools and standards. Later, in 2005 and 2006, the Ministry of Finance also led a project implementing ERM in selected units of public administration as a pilot phase.

Managers in Poland were becoming familiar with ERM concepts mainly by educating themselves. In 2006, the POLRISK Risk Management Association[1] was established, and later became a member of the Federation of European Risk Management Associations (FERMA).[2] Under POLRISK, ERM has been popularized in a more structured way by its first founding members and other officers. Since 2006, ERM experts from around the world have begun to come to Poland as speakers in the annual conferences organized by POLRISK.

There are many people involved with Poland's ERM efforts.[3] We have the honor to be two of them. For example, late in 2009, Slawomir Pijanowski, on behalf of POLRISK, with the support of Kevin W. Knight, AM, initiated the preparation for adoption of ISO 31000 in Poland. In 2011, Mr. Pijanowski, as representative of both POLRISK and the Polish Committee for Standardization, joined ISO/PC 262, contributing to the elaboration of ISO 31004. It is, however, difficult to demonstrate the benefits of ERM in Poland, because there are few good examples of ERM implementation in domestic companies. Additionally, there are few CEOs or independent parties who have observed how ERM adds value. This state of ERM implementation provides the motivation for our case study. This case study examines the reasons, challenges, and obstacles of ERM implementation and will help us reach the right conclusions.

  • [1] More information on the POLRISK Risk Management Association can be found at the association's website: polrisk.pl.
  • [2] More information on the Federation of European Risk Management Associations can be found at ferma.eu.
  • [3] We would like to mention and honor here all the people we know, but we are aware that this would be an imperfect and incomplete list. However, we are sure that on such a list there are at least POLRISK founding members; former presidents Rafal Rudnicki and Tomasz Miazek; current POLRISK board members Ewa Szpakowska, Hanna Golas, and Jerzy Podlewski; and all active previous and current POLRISK members.
 
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