Buying time.

To realize the value of one month: Ask a mother who has given birth to a premature baby. To realize the value of one week: Ask an editor of a weekly newspaper. To realize the value of one minute: Ask a person who has missed an important phone call. To realize the value of one second: Ask a person who has survived an accident. To realize the value of one millisecond: Ask a person who has won a silver medal at the Olympics. To realize the value of the months prior to a major crisis: what is that worth?

To assist my valuation attempt, here is a simple parallel--corporate behavior and drivers on a freeway. We all have access to brakes and accelerators.

Some drivers gladly "press the pedal to the metal." They are the risk takers.

Their style is daring, their hearts race, they arrive at their destination faster and they proudly leave everyone behind in their dust.

Their experience is invigorating but dampened when something spontaneously crosses their path. They hit the brakes, yet often a little too late, with too little time to do anything.

Both businesses and ears are driven by humans and because we are "only human" we can only detect things at restricted speed. We are limited by our natural human reaction time. As disappointing and fallible as it sounds, it is our reality. So relying on a miraculous braking system to save us from perilous scenarios every time is, to say the least, naive.

There are ways to compensate for our human response limitations. Enterprise risk management (ERM) is one way. ERM is a discipline that purposely assesses the effect of inevitable events, good or bad, on our company goals.

This practice is to be conducted, at minimum, prior to major decisions. ERM is dedicated to the design of preemptive plans for risk acceptance, prevention or reduction. It provides us time to think before acting. ERM takes deliberate time to effectively tackle opportunities or threats that may lie ahead.

Yet ERM has been gaining a tarnished reputation. It is often seen as a lethargic and weighty process riddled with bureaucracy and inefficiency. I have seen the struggle this discipline has had gaining traction in business. Many senior executives have freely admitted that they are reluctant to commit to ERM endeavors because they have yet to see tangible "value" from ERM efforts.

The result of intelligent risk prevention or acceptance seldom gets recognized on our corporate income statements. Sometimes these efforts are expressed in terms like "cost avoidance" and often dismissed as "phantom" savings. So how can we blame our senior executives for their lack of excitement with ERM? Is it possible that we have been expressing ERM "value" in a limited fashion all this time?

ERM "value" is resident in the time dedicated to cushioning possible future blows. Finance teachings tell us that: the value of time is the opportunity cost of the time. Problems cost money. Missing opportunities cost money. Time committed to lessening or avoiding the effects of such events saves future money. Time value of money concepts suggest that having future cash sooner equals more profit and more profit is good.

Demonstrating the real-time value of avoiding a major fiasco in profit terms, that is attractive. We may now have an enticing carrot to dangle from our rearview mirror.

JOANNA MAKOMASKI is the risk management columnist for Risk & Insurance[R]. She manages risk for an energy transportation and distribution company. She can be reached at [e-mail].