Even though the global financial crisis and ever-expanding supplier networks have intensified the spotlight on risk, companies are still struggling to define "risk management" and overcome barriers to its adoption.
For example, more than half of the risk management, finance and C-level executives participating in a new survey from Marsh and the Risk & Insurance Management Society Inc. (RIMS) rated enhancing strategic risk management as their primary focus area in 2010. Yet, when asked about the top challenges they face when trying to improve their company's risk management practices, managers in the survey cited what I would consider fundamental system requirements, such as :
Lack of personnel resources dedicated to risk management (44 percent)
Other areas having greater priority (43 percent)
Demonstrating value of risk management (34 percent)
Lack of financial resources dedicated to risk management (33 percent)
Senior management commitment (32 percent)
The report, Elevating the Practice of Strategic Risk Management: Excellence in Risk Management VII, was released yesterday during the "Excellence in Risk Management VII" session at RIMS' 2010 Annual Conference.
Among measures to expand risk management capabilities in 2010, more than half (56 percent) of those surveyed plan to enhance their strategic or enterprise risk initiatives that's up from 45 percent in 2009. Training and education, the top priority in 2009, dropped to second this year, followed by updating technology and improving governance structure.
Brian C. Elowe, a managing director in the Global Risk Management Division of Marsh, sees this shift in priorities as a reflection of the heightened focus on compliance with new Securities and Exchange Commission (SEC) Rule No. 33-9089, which calls for increased disclosure of risk governance practices.
"Showing a return on investment for an ERM program has been an issue for some firms. However, with the new SEC rule, risk executives have one more item to show in their list of areas that will benefit from having ERM in place," he says.
A copy of the report is available here. (Registration required.)