A recent study1 of 564 organizations disclosed that nearly 60% lacked formalized ERM governance. Those without formalized ERM governance scored 93% lower in standard ERM competency drivers compared to those with formalized ERM governance.
Consequences for ineffective ERM governance are severe: Regulators, auditors, rating agencies and boards are demanding verifiable evidence from organizations’ ERM programs. Plaintiff attorneys behind recent class action lawsuits because of misleading risk disclosures are touting organizations’ ERM efforts as fraud.
Formalize your ERM governance to achieve these gains:
1. Provide assurance with documentation of improved decision making
2. Reduce existing compliance activities in low risk impact areas
3. Standardize to eliminate duplication and “assessment fatigue”
4. Prioritize engagement scope to reduce external audit fees
With good ERM governance, an enterprise-wide filter with functionally specific layers replaces a traditional siloed approach. The layers work together to standardize an approach across traditional silos.
Maturity Models – Identify gaps, prioritize goals and create action plans to achieve the goals.
Financial Elements – Tie all operating risks to elements within your financial statements.
Business Processes – Evaluate the risks to how value is created and delivered.
ERM Plans – Uncover risks to corporate strategy; evaluate controls; prioritize control and test activity.
Resources – Link business activities to physical and information assets.
Learn how to build a best practice approach to ERM Governance in six to eight weeks.
1Risk and Insurance Management Society 2008 State of ERM Report
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Visit our Knowledge Center to download insights about the required layers of an effective ERM Governance Foundation, such as systematic risk management frameworks, roles of risk management practitioners and necessary communications and involvement of front line risk owners.