Risk Management Still Important Despite Slowing of ERM
Nearly two in three executives with risk management responsibilities feel their organizations would benefit by taking a more strategic approach to risk, while fewer than one in five views their current risk program as strategic. At the same time, growth of the discipline of enterprise risk management (ERM) — a key component of many strategic risk management approaches — appears to be reaching a plateau.
A new report from Marsh Inc., a provider of insurance and risk management services, in collaboration with the Risk and Insurance Management Society (RIMS) and Financial Executives International (FEI), finds the appetite for implementing ERM programs leveling off as firms direct resources to other corporate priorities. The report, Excellence in Risk Management V: Viewing Risk Management Strategically, expands on findings of an extensive survey of risk practitioners presented in April 2008 during a session at RIMS 2008 Annual Conference & Exhibition in San Diego, California.
Larger public companies are more likely to take a strategic approach to risk management. Executives at these firms generally considered their most significant exposures to be related to brand reputation, business continuity, and regulatory/compliance issues. On the other hand, firms with more traditional approaches to risk management tended to view their top exposures as those associated with corresponding insurance solutions, including general liability, property, and workers’ compensation.
Nearly one-third of the survey participants said they would focus on governance structure as part of their ERM investments, a critical area that receives attention from the C-suite and board. Nearly half indicated they also will invest ERM resources in training and education.
Satisfaction with ERM initiatives often involved the realization that they can’t be treated as projects with a set beginning and ending; rather, ERM must be treated as a process for looking at risk throughout an organization. Among firms with ERM initiatives in place for more than two years, 44 percent of the survey participants were either extremely or very satisfied with their program, while fewer than one in four with programs in place less than two years expressed the same level of satisfaction. Similarly, 83 percent of participants with fully implemented ERM programs expressed high levels of satisfaction with them compared to 27 percent for those with partially implemented programs.
To register for a copy of the report, click here.
For more details on ERM, please read Making Enterprise Risk Management Pay Off.
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For more insights on the issue of risk management and how it impacts business continuity, including the issues noted by Marsh, read: A Risk Management Approach to Business Continuity: Aligning Business Continuity with Corporate Governance.
Tags: Business Continuity Management, enterprise risk management, Risk Management
