According to a new report published by Marsh and RIMS, risk management is playing a more strategic role within organisations than ever before, although many are failing to realise its full potential.
In response to the 11th annual excellence in risk management survey, 93 percent of organisations indicated that risk management carries either some or a significant impact on setting their business strategy, with 76 percent confirming that their company treats risk management as a key strategic function.
The Excellence in Risk Management XI survey, produced collaboratively by Marsh and RIMS, was compiled from online responses received in February 2014 from nearly 600 risk professionals, c-suite executives, and others involved in risk-related functions.
Carol Fox, director of the strategic and enterprise risk practice at RIMS, says, “There is little doubt that risk management has evolved over the past 10 years into a role that is much more aligned to an organisation’s strategic planning.”
Yet, when asked whether their organisation uses the risk management function to its fullest capacity, only 20 percent of respondents answered positively. Fox continues, “While this evolution is encouraging there always is more to do and additional opportunities to be uncovered and seized.”
The report notes a number of ways in which companies can more effectively use the risk management department to its full potential.
Brian Elowe, a managing director at Marsh, notes that c-suites and boards are asking risk professionals for much more. “They want to know what unexpected risks the organisation may face, and where to invest capital most effectively.”
One way the department can be used to its full potential is through the deeper use of analytics, “If used properly, data and analytics can help organisations make better business decisions while at the same time increase the profile of risk management within the organisation.” Elowe claims.
Another way to better engage with risk management is for risk professionals to act as “risk knowledge centers,” providing an “omniscient” view of how risks impact their companies. This idea was advanced by various focus groups comprised of risk executives from numerous sectors, who contributed to the survey.
Marsh, RIMS, management, risk