While risk management is playing a more strategic role within
organizations than ever before, many are not using the full potential of
the function, according to a new report published today by Marsh and
RIMS.
Ninety-three percent of C-suite respondents to the 11th
annual Excellence
in Risk Management survey indicated that risk management carries
either some or significant impact on setting their organization’s
business strategy with 76% confirming that their organizations treat
risk management as a key strategic function. However, when asked whether
their organization uses the risk management function to its fullest
abilities, only 20% of C-suite respondents answered affirmatively.
“There is little doubt that risk management has evolved over the past 10
years into a role that is much more aligned to an organization’s
strategic planning,” said Carol Fox, director of the strategic and
enterprise risk practice at RIMS. “While this evolution is encouraging
there always is more to do and additional opportunities to be uncovered
and seized.”
For example, one way organizations can more effectively use the risk
management department to its fullest potential is through the deeper use
of analytics, the report notes.
“C-suites and boards are asking risk professionals for much more than
what insurance coverage is in place. They want to know what unexpected
risks the organization may face, and where to invest capital most
effectively,” said Brian Elowe, a managing director at Marsh. “If used
properly, data and analytics can help organizations make better business
decisions while at the same time increase the profile of risk management
within the organization.”
When asked to identify the top areas where organizations would benefit
from improved use of data and analytics, C-suite respondents ranked risk
mitigation and risk identification as their first and second areas
respectively, while risk professionals ranked risk bearing capacity and
risk quantification as their top choices. All four areas depend on an
understanding of internal and external metrics, which are made available
through the aggregation of data and deeper analytical capabilities, the
survey noted.
Another way to more fully engage risk management is for risk
professionals to act as “risk knowledge centers,” providing an
“omniscient” view of how risks impact their organizations. This idea was
advanced by various focus groups comprised of risk executives from
numerous sectors, who contributed to the survey. One director of risk at
a major business-to-business service organization said that serving as a
sought-after, centralized resource for insights has led the organization
to embrace the risk management function “rather than see it as ‘sales
suppressors’.”
Other findings from this year’s survey include:
-
While 47% of risk professionals identified risk management execution
as their primary role, only 16% of C-suite respondents agreed.
Instead, a majority (39%) of the C-suite respondents identified the
CFO as having that responsibility.
-
Risk professionals identified cyber risk as their number one risk
priority for 2014, up from number 12 in 2013. The risk is also gaining
more consideration among the C-suite, moving from number 26 in 2013 to
number 12 on their risk priority list this year.
-
Seventy-five percent of the risk professionals and 69% of the C-suite
surveyed said they believe their organizations manage risk effectively.
The Excellence in Risk Management XI survey, produced
collaboratively by Marsh and RIMS, was compiled from online responses
received in February 2014 from nearly 600 risk professionals, C-suite
executives, and others involved in risk-related functions.
Findings from the survey were released today at the RIMS 2014 Annual
Conference & Exhibition. Copies of the survey are available on www.marsh.com
and www.rims.org.
About Marsh
Marsh
is a global leader in insurance broking and risk management. We help
clients succeed by defining, designing, and delivering innovative
industry-specific solutions that help them effectively manage risk. We
have approximately 27,000 colleagues working together to serve clients
in more than 100 countries. Marsh is a wholly owned subsidiary of Marsh
& McLennan Companies (NYSE: MMC), a global professional services
firm offering clients advice and solutions in the areas of risk,
strategy, and human capital. With more than 54,000 employees worldwide
and approximately $12 billion in annual revenue, Marsh & McLennan
Companies is also the parent company of Guy
Carpenter, a global leader in providing risk and reinsurance
intermediary services; Mercer,
a global leader in talent, health, retirement, and investment
consulting; and Oliver
Wyman, a global leader in management consulting. Follow Marsh on
Twitter @Marsh_Inc.
About RIMS
As the preeminent organization dedicated to advancing the practice of
risk management, RIMS, the risk management society™, is a global
not-for-profit organization representing more than 3,500 industrial,
service, nonprofit, charitable and government entities throughout the
world. Founded in 1950, RIMS is dedicated to advancing risk management
for organizational success, bringing networking, professional
development and education opportunities to its membership of more than
11,000 risk management professionals who are located in more than 60
countries. For more information on RIMS, visit www.RIMS.org.
Photos/Multimedia Gallery Available: http://www.businesswire.com/multimedia/home/20140428006322/en/
Copyright Business Wire 2014