| Copyright: | PR Newswire | | Source: | PR Newswire | | Wordcount: | 732 |
NEW YORK, Nov. 14 /PRNewswire/ -- 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 today 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.
More Findings: -- Executives surveyed indicate that in 2006, 34 percent of their corporate boards, up from 29 percent in 2004, believe that ERM is significant or highly significant in carrying out their stewardship roles. -- There are substantial differences in ERM maturity across industries: financial services, energy, and utilities have more developed ERM processes than other industries. However, there has been rapid growth in ERM in the healthcare sector over the past years. -- Companies that are outside of North America have developed processes at a faster pace and have a higher rate that are up and running. -- Implementing ERM in a company generally takes three to five years. And companies often find they start and restart crafting an ERM framework that is viable for their particular organizations. -- Among core business functions (e.g. legal, CFO, CEO, Board), there is general agreement on the importance of ERM; nearly 1/3 of each of these functions consider ERM to be of critical importance to their business.
"Once adopted and implemented broadly throughout the firm, ERM becomes
truly part of how companies do business," says Ellen Hexter, head of The
Conference Board Enterprise Risk Management Center and author of the report.
"The goal is to create greater awareness of risk and reward tradeoffs, and to
drive risk thinking and appropriate risk management throughout businesses.
Ownership is a critical operational and cultural component to enterprise risk
management. When risks are identified and assigned to individuals, there is
likely to be greater accountability for each risk and greater understanding of
how any specific risk impacts a business."
ABOUT THE SURVEY
The majority of companies represented in the current survey of risk,
audit, and finance executives reported $1 billion in revenue, with only 22
percent reporting less than $1 billion revenue. The majority are based in
North America (70 percent), with 22 percent from Europe and 8 percent
representing the rest of the world.
ABOUT THE CONFERENCE BOARD
Non-partisan and not-for-profit, The Conference Board is the world's
leading business membership and research organization. The Conference Board
produces The Consumer Confidence Index and the Leading Economic Indicators for
the U.S. and other major nations. These barometers can have a major impact on
the financial markets. The Conference Board also produces a wide range of
authoritative reports on corporate governance and ethics, human resources and
diversity, executive compensation, outsourcing, profiting from a mature
workforce, and corporate citizenship. Our conference and council programs
bring together more than 12,000 senior executives each year to share insights
and learn from each other. Visit The Conference Board's website at
www.conference-board.org.
ABOUT OLIVER WYMAN
Oliver Wyman is a global management consultancy. For more information
please visit www.oliverwyman.com.
Source: Risky Business: Is Enterprise Risk Management Losing Ground? Research Report #1407-07-RR, The Conference Board
SOURCE The Conference Board
CONTACT: Frank Tortorici of The Conference Board, +1-212-339-0231, f.tortorici@conference-board.org
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