Our 2004 study found that ERM had moved onto the boardroom agenda. However, ERM programs had barely scratched the surface in all but a few leading companies as respondents grappled with the technical and organizational challenges of implementing and embedding effective ERM capabilities.
Four years on, ERM has come to a crossroads as investment and expectations have soared, yet many organizations have yet to realize the full benefits. Rating agency assessment and the move to Solvency II in the EU are raising the bar for ERM and have arguably been the primary drivers of progress in recent years. Common evaluation criteria include the strength and forward-looking capacity of risk assessment and control, the effectiveness of risk-based capital allocation and the extent to which risk awareness is integrated into governance, decision-making and strategic execution within the business.
Going forward, companies will need to demonstrate how they rate against the emerging set of expectations and standards for ERM. The practical challenge facing today’s insurers is how to continue implementing their ERM framework in order to meet these requirements over the next few years.
