ERM Approaches in Dire Need of Repair

This week, Forbes magazine reported results from the 2009 Global Risk Management Study sponsored by Accenture. The detailed report demonstrates the need for significant improvement in enterprise risk management approaches at major corporations across the globe. Here's a summary of the findings.

A snapshot of the results of the survey of 260 chief financial officers, chief risk officers and others responsible for corporate risk in 21 countries suggests just how much surgery may be needed to repair risk management. By huge margins, the respondents identified the following major problems:

• Ineffective integration of risk, return and capital issues in decision making: 85%


• Lack of alignment between a company's strategy and its risk appetite: 85%


• Insufficient management understanding of risk exposure types, and lack of agreement on how to mitigate such risks: 82%


• Inadequate availability of timely risk, finance and business data: 80%


• Lack of company-wide processes that could provide a complete picture of the impact of risk exposure: 78%


• Ambiguous divisions of responsibility concerning risk between corporate and business units: 78%

Following the last big downturn, in 2002, businesses attempted to adjust their risk exposure by strengthening their internal controls and improving their financial transparency. Today's world, however, requires much stronger fixes than just tweaking finance and accounting practices. In fact, businesses must fundamentally change their core risk processes.

If your company is searching for cost-effective solutions to challenges such as these, Wheelhouse Advisors can help. Visit www.WheelhouseAdvisors.com or email us at NavigateSuccessfully@WheelhouseAdvisors.com, to learn more.