Rating Agencies -- Standard & Poor's, Moody's, A.M. Best and Others Weigh in on Enterprise Risk Management
While companies have struggled for years with how to define Enterprise Risk Management (ERM), leading to multiple methodologies and approaches, ERM implementations have been largely ineffective. The ineffective implementations are usually due to a lack of needed technology, a silo'd approach, a compliance-driven focus, or a lack of support from the top of the organization. The results -- limited effective practice and minimal value. Yet in today's economy with the globalization of business, rising expectations from shareholders and constantly increasing reforms in regulations, the corporate sensitivity to risks, risk relationships and their potential, material impact is at an all-time high.
Corporations continue to get attention and pressure from all perspectives to incorporate ERM into the business process and strategic planning. It is expected that Standard & Poor's actions will be a catalyst to bring ERM and its long-anticipated benefits to the forefront.
Standard & Poor's Uses Strategic ERM to Measure Management Leadership
Bob Morrell, CEO of Riskonnect and Geoffrey Buswick, Managing Director of S&P Boston, present at the Society of Risk Management Consultants Conference, October 2009
Sign up for the Riskonnect Education Portal for access to our achived webinars featuring Steve Dreyer, Practice Leader, U.S. Utilities & Infrastructure Ratings for Standard & Poor's
Demystifying ERM with Risk Visualizations and Understanding Risk Interrelationships: A Look at Standard & Poor's Risk Management Expectations & Findings; Experience Riskonnect's Quick Start ERM Program
Riskonnect Shakes up the Risk Management Software Market-- A 2009 RIMS Conference Wrap-Up
Moody's
Moody's has four pillars to its risk management assessment:
Risk Governance
Risk Management
Risk Analysis and Quantification
Risk Infrastructure and Intelligence
A.M. Best
"A. M. Best believes that ERM - establishing a risk-aware culture, using sophisticated tools to consistently identify and manage, as well as measure and manage risk correlations - is an increasingly important component of an insurer's risk management framework...."
"A.M. Best perceives risk management as paramount to an insurer's long-term success. As such, within the rating process, each company - regardless of its size or complexity - is expected to explain how it identifies, measures, monitors and manages risk."
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"The Riskonnect ERM system has already paid for itself. Just having the central database alone gives us much better information management and the ability to generate the reports we need."
-Todd Perkins
Director Enterprise Risk
Southern Company
Enterprise Risk Management Points of Value
ERM should begin at the strategic level, with a top-down approach and be implemented holistically into an organization. Doing so can bring intrinsic, quantifiable value including:
• Better communication at the executive level
• Better, more strategic business planning
• Smaller losses in adverse times (less volatility)
• Rebounding more quickly from losses (quicker recovery)
• The establishment of better future practices (learning
from mistakes)
The Riskonnect ERM comprehensive work platform brings both the technology and expertise to enhance your risk management program.
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