Much More Enterprise Risk Management Work Remains

A recent report by Governance Metrics International ("GMI") demonstrates that most major public corporations have a great deal of work remaining to improve their enterprise risk management practices.  GMI rates corporate governance and risk management practice for 4,162 companies worldwide.  Here is a summary of the major findings from the report.

Standardized disclosure of company-wide risk management is lacking

• Only 33.1% of the 4,162 companies covered by GMI worldwide provide comprehensive disclosure on their enterprise risk management policies (ERM) in the annual report or other publicly available source


• Only 8.4% disclose they have implemented a nationally or internationally recognized risk management charter or standard such as COSO's Integrated Framework for Enterprise Risk Management

Risk committees of the board are even less common and are sector-specific

• 27.6% of companies covered by GMI disclose having a combined audit and risk committees


• 5.9% of companies covered by GMI disclose a stand-alone board level risk committee or subcommittee


• These were most often found among Banks (35.1%), followed by Life Insurers (21.3%) and Non-life Insurers (17.6%)


• There were no stand-alone board level risk committees or subcommittees in 11 of the 41 sectors covered by GMI

According to GMI President and CEO Howard Sherman, “Events of the last year have made it clear there is a need for heightened risk oversight at the board level. As companies start to come to grips with the challenge, we thought now would be the right time to start to develop a baseline. Our expectation going forward is that companies seen to be taking serious steps to augment risk oversight, especially in the financial sector, will be rewarded by the market.”

Wheelhouse Advisors is prepared to help your company improve its corporate governance and risk management practices in a cost-effective manner.  Visit www.WheelhouseAdvisors.com to learn more.