It appears that most companies realize there are great benefits to implementing so-called enterprise risk management, but few have done much to get ERM off the ground, says a Conference Board/Mercer Oliver Wyman survey.
Over the past five years, the business world has seen two wars, corporate scandals that led to the Sarbanes-Oxley Act and, of course, the 9/11 attacks. So business managers are very much aware that there are risks that can seriously impact their companies. And more than 60 percent of the 271 top executives surveyed believe there will be a significant increase in external risk during the next five years. Yet only 11 percent have completed ERM initiatives.
Companies that have already implemented ERM report a significantly higher level of value added than companies that have not yet fully implemented these measures, The Conference Board says.
The study finds that companies fully embracing ERM are better able to improve management practices, such as strategic planning, and have a greater ability to understand and weigh risk-reward equations in their decisions.
Non-partisan and not-for-profit, The Conference Board is a leading business membership and research organization. It produces The Consumer Confidence Index and the Leading Economic Indicators for the U.S. and other major nations. Visit www.conference-board.org for more information.
Mercer Oliver Wyman is a financial services and risk management consulting firm. More on it is available at www.merceroliverwyman.com.