C-suite should wake up to risk mgt

NEW YORK: Companies with strategic risk management can reap benefits in such areas as development of business strategy, regulatory compliance, and improved communication about risk across the organization. However, they often must first hurdle internal barriers. That is one of the conclusions of a new survey, Elevating the Practice of Strategic Risk Management, released today Marsh and the Risk and Insurance Management Society, Inc. (RIMS) during the “Excellence in Risk Management VII” session at RIMS’ 2010 Annual Conference.

This is a time of opportunity for risk practitioners and their C-level colleagues,” says Brian C. Elowe, a managing director in the Global Risk Management Division of Marsh. “For risk and financial executives, now is the time to move their organizations along a path toward more strategic risk management.”

Although fallout from the global financial crisis and the implementation of more stringent financial regulatory requirements have given businesses the impetus to adopt enterprise-wide risk management approaches, many still face roadblocks in elevating their risk practices.

More than half of the risk management, finance and C-level executives participating in the survey cited enhancing strategic risk management as their primary focus area in 2010. Yet, an almost equal number conceded their firms do not have an enterprise risk management (ERM) program.

To achieve a 360-degree view of risk, many firms must hurdle such challenges as organizational silos; divergent views within their own companies about the definition of ERM and key risk issues; as well as the lack of personnel and financial resources. The survey was compiled from online responses received during the first quarter of 2010 from 418 risk managers, C-suite, finance and other executives involved in risk-related functions.

“The use of deeper analytics and other strategic tools and methods allows risk managers and financial executives to provide compelling information for the C-suite discussion about uncertainty, risk, and volatility – and to achieve greater visibility in their organizations,” said Elowe.

He added that given the imperative for more transparency around risk issues, CEOs, CFOs and others in the C-suite have an opportunity to tap into the risk management resources across their organizations to elevate the discussion and practice of risk management and broaden their outlook.

“Enterprise risk management, or strategic risk management, is no longer just a ‘nice to have,’” says Deborah Luthi, vice president of RIMS board of directors. “Regulators, customers, investors, and other key stakeholders are pressuring organizations to identify and explain how they manage the risks they face.”