OPPORTUNITIES TO IMPROVE ORGANIZATIONAL ALIGNMENT AND EMERGING RISK DISCUSSIONS HIGHLIGHT ANNUAL EXCELLENCE IN RISK MANGAEMENT REPORT FROM MARSH AND RIMS
New York, April 27, 2015 – Findings from a new report jointly published today by Marsh, a global leader in insurance broking and risk management, and RIMS, the risk management society™, highlight opportunities for senior executives to facilitate better organizational alignment of their risk management departments and for risk professionals to help the company focus discussions regarding emerging risk issues.
The 12th annual Excellence in Risk Management survey finds that overall, critical risk management functions continue to advance and their overall influence grow within organizations — a trend that is likely to continue given the complexity of the global business environment. More can be done, however, to improve the risk management department’s strategic effectiveness.
For the first time, the Excellence survey sought to better understand how organizational alignment affects the execution of a risk management strategy. Among the findings, the survey revealed that risk management departments that do not report into finance are generally better aligned with other strategic functions within their organizations — most notably in the areas of enterprise risk management, compliance, IT risk management, privacy, and security.
Additionally, 27% of the risk professionals who report into the CFO or treasurer said they expect an increase in spending for training risk management staff, whereas 46% — nearly double — of those reporting elsewhere expect an increase.
“Finance executives certainly have an opportunity to facilitate greater organizational connections for the risk management departments that report to them in order to position them for broader impact across the enterprise,” said Brian Elowe, a managing director at Marsh, and co-author of the report.
Opportunities also exist for risk management when it comes to emerging risks. According to the survey, only 27% of risk professionals said that identifying emerging risks would be a priority in the coming year, which is counter to the message being heard from many boards that are concerned with “what’s around the corner.”
Furthermore, when asked how companies view the potential impact from some of the top global risks as discussed in this year’s World Economic Forum Global Risks 2015 report, the majority of risk professionals categorized state collapse, climate change, and water crisis as risks that are not of immediate concern, with many saying they would never impact their organizations. This is despite all three ranking highly in this year’s Global Risk report in terms of their likeliness to happen and their potential impact over the next 10 years.
“These findings certainly suggest that more can be done to elevate discussions around emerging risk issues within organizations, with an eye toward potential long-term operational and/or financial consequences,” said Carol Fox, director of the strategic and enterprise risk practice at RIMS, and a co-author of the report. “The good news is senior leadership more than ever is relying on risk management to provide strategic input around business strategy, so there is a real opportunity for risk professionals to lead discussions in this area.”
The Excellence in Risk Management XII survey is based on more than 300 responses to an online survey and a series of focus groups with leading risk executives in February 2015.
Findings from the survey were released today at the RIMS 2015 Annual Conference & Exhibition. Copies of the survey are available on www.marsh.com and www.rims.org.
About Marsh
Marsh is a global leader in insurance broking and risk management. Marsh helps clients succeed by defining, designing, and delivering innovative industry-specific solutions that help them effectively manage risk. Marsh’s approximately 27,000 colleagues work together to serve clients in more than 130 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy, and people. With 57,000 colleagues worldwide and annual revenue exceeding US$13 billion, Marsh & McLennan Companies is also the parent company of Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; Mercer, a global leader in talent, health, retirement, and investment consulting; and Oliver Wyman, a global leader in management consulting. Follow Marsh on Twitter @MarshGlobal, or on LinkedIn, Facebook, and YouTube.