State of ERM

The Risk and Insurance Management Society ("RIMS") just released its 2008 State of ERM Report and it provides some interesting perspective on the evolution of ERM programs across the globe.  A summary of the key findings is provided below.

• Organizations that have embraced ERM have realized a concrete advantage in their risk management competency. The study found that 93% of organizations with formalized ERM programs in place make better risk-informed decisions—a recognized competitive advantage over those that do not have an ERM program.


• Organizations that report they have an ERM program in place still fall significantly short of achieving managed or better risk maturity. The study demonstrates that, based on the ERM guidelines presented in RIMS Risk Maturity Model for ERM, only 4% of these companies have achieved a managed or better level of risk management competency in all risk competencies. This suggests that organizations may have a false sense about all that is required for an effective risk management program.


• Data from the study verifies that formalized infrastructures in well-managed ERM programs embody the 68 best practice guidelines for efficient and effective risk management programs as presented in RIMS Risk Maturity Model for ERM.


• The study links ERM to better business performance. There is a distinct correlation between companies that score higher on RIMS Risk Maturity Assessment and companies that possess higher credit ratings. The same is true of low scoring companies that, typically, possess lower credit ratings. Hence, better managed companies in terms of ERM practices benefit from better business performance.

So, the report certainly shows the ever increasing value of ERM programs.  However, progress remains to be made in many areas of ERM to extract its full value and help companies maximize their business performance.