ERM becomes truly part of how companies do business
15 Nov '07
3 min read
More corporate boards are driving enterprise risk management (ERM), but despite progress, ERM has yet to become embedded in most companies' day-to-day activities, according to a report released by The Conference Board.
The report, sponsored by Oliver Wyman, a leading global management consultancy, is based on a survey of risk, audit, and finance executives of 200 companies from a range of sectors including manufacturing, financial services, healthcare, energy/utilities, wholesale/retail, communications/transportation/warehousing, and business/professional services.
Fifty-five percent of the survey participants indicate that their corporate boards are a top driver of their enterprise risk management program, up from 49 percent two years ago.
Still, ERM, a strategic method of understanding and managing risks, is not being integrated in corporate cultures. The progress has been mainly in early stage efforts, such as creating a risk inventory and assessment process.
As such, key ERM benefits in managing the overall corporate risk profile and portfolio have not yet accrued in most companies.
The Conference Board survey, conducted over 2006 and 2007, was designed to update its own 2004 survey on ERM (of 271 companies).
Latest results show that, almost universally, there is greater awareness of risk across companies. Executives now report that the top of the organization is far more interested in ERM than previously.
While CEOs in particular are slightly less certain than in 2004 that ERM is crucial to performing their own role, this result could be partly due to many CEOs delegating risk management responsibility to chief risk officers and other high-level executives.
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