(216) 609-3940
SandRun Risk
  • Home
  • What We Do
    • Risk Management
    • Insurance Claims
    • Insurance Archaeology
  • Blog
  • About
    • Team
    • Our Company
    • Articles
  • Contact

The State of Enterprise Risk Management in the USA (Part II): The Role of Senior Leadership

6/14/2020

0 Comments

 
Picture

​Part I of this article provided an overview of the results of the 2019 risk management survey conducted by The Risk Institute at The Ohio State University’s Fisher College of Business. Part II of this article focuses on the role of leadership and the integration of risk management throughout the enterprise, including day-to-day decision-making.

PicturePhilip Renaud - Executive Director, The Risk Institute at The Ohio State University Fisher College of Business
Let’s start with some statistical findings. Keeping with trends reflected in The Risk Institute’s 2018 Survey, the Chief Executive Officer (CEO) is again the senior leader most likely to be in charge of risk management (about 30%), followed by the Chief Financial Officer (CFO) in about 15% of firms (collectively 45% or almost one-half the companies we surveyed. The next most likely person is the  Chief Risk Officer (CRO) – about 10%. That number jumps to over 30% for financial firms who are much more likely to put a CRO in charge of risk management. CROs also typically report to the CEO.

“Tone at the top” matters for both resource allocation and focus. Interestingly, no firm in our survey decreased financial support for risk management and almost half of the surveyed firms allocated more funding of risk management resources whether such resources were internal or external. Clearly, senior leaders are viewing risk management as a priority.

Integration is a matter of perspective. Not surprisingly, the majority of surveyed firms think of risk management in negative terms with its core function to be a shield or strategy that is defensive or reactive. An example would be a risk management objective to protect or enhance the company’s brand. A minority of companies, particularly financial firms, think of risk management in more positive terms and see the function as a tool for adding value and growth to the company. Which mindset a company has will be evident from how it may approach the current COVID-19 pandemic. We think that companies that take the time to be proactive and develop a well-thought out response plan are more likely to be successful. 

Integration is also a matter of business process. More than 20 of surveyed firms indicated that they got better business results by integrating risk management into their business processes such as strategic planning, compliance, quality control, operational business planning and management, and audit. Particularly with negative risk, integration generates more organizational awareness of risk and what should be identified, treated, monitored, and reviewed as needed.  

This is especially important for companies that operate in environments that are volatile or highly regulated. About 24% of financial firms reported an “exceptional improvement” in their ability to meet regulatory and compliance requirements when they integrated risk management to achieve corporate objectives. 21%  of the surveyed financial firms also reported “exceptional improvement” in avoiding operating losses or litigation and protecting customers and clients.  

​Finally, getting the risk management function to better integrate with Human Resources remains a challenge for many companies. We will turn to that discussion in Part III of this article.


0 Comments



Leave a Reply.

    Authors

    Lori Siwik and Mark Siwik are the founders of SandRun Risk.  They apply the principles of vertical leadership and lean six sigma to the discipline of risk management.  From time to time they share their blog with guest authors who write about important risk management principles.

    Categories

    All
    Insurance Claims
    Mergers And Acquisitions
    Risk Management

    Archives

    May 2022
    December 2021
    September 2021
    August 2021
    July 2021
    June 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    June 2017
    May 2017
    March 2017
    December 2016
    November 2016
    October 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    June 2015
    May 2015
    April 2015
    March 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    May 2014
    April 2014
    March 2014

    Categories

    All
    Insurance Claims
    Mergers And Acquisitions
    Risk Management

    RSS Feed

What We Do.

Risk Management
Insurance Claims
Insurance Archaeology

Blog.

About.

Team
Our Company
Articles

Contact.

Legal.

Privacy
Terms of Use
 
Copyright ©2014 | 4199 Kinross Lakes Parkway, Ste. 275 Richfield, Ohio 44286 | 216-609-3940 | info@sandrunrisk.com