Standard & Poor’s, Moody’s and other rating agencies require evidence of effective ERM governance in their rating process. The chart below shows the change in cost of capital for a corresponding change in credit rating outlook.
Standard and Poor’s rate a company in several categories. S&P reported in 2007 that the ERM category, as the primary predictor of future performance, was the sole determining factor for a rating change in nearly 10% of their decisions, adversely or positively.
Use LogicERM first for effective governance to meet Standard & Poor’s ERM expectations. LogicERM will then help you manage activities to deliver business value that will become visible when you are rated across all evaluation categories. LogicERM has developed an algorithm based on empirical data, that correlates an organization’s risk management competency and its credit ratings with 98% accuracy. Now you can improve your business and provide evidence to your rating agencies, regulators, and auditors at the same time.
Receive our rating agency evaluation criteria or ask us about our how our ERM Governance Package can help raise risk competency within your organization.
Quotes
“We feel ERM is not a passing fad.”
Standard & Poor’s Extends Enterprise Risk Analysis To All Corporate Ratings – May 7, 2008
Strategic and operational risks cause eighty-seven percent of loss in value.
Booze Allen Hamilton Value Destruction Study, 2003