Treasury & Risk

“Today risk management is a component of how this company operates on a day-to-day basis,” says John Jenkins, Tyco’s corporate secretary. “So, for example, with strategic planning, it’s not a matter of the risk manager sitting on the side and suddenly chiming in; it’s just a component of the whole process."

That, Christie Kaufman, vice president of Marsh Risk Consultancy and one of the three authors of the Marsh/GMI study tells Treasury & Risk in an exclusive, is the way risk management ought to work.

In a survey of 149 companies, Kaufman says, 79% report having a formal ERM program, and of those about 52, or two-thirds, say they’ve had their programs for more than a year. Of the 21% that say their companies have no ERM program, 40%, or two in five, say they plan to develop one within the year.

However, half of the companies that did have ERM programs conceded that these programs were only partly integrated into businesses, says Kaufman. This was attributed to ineffective communications between risk managers and the rest of the business, a lack of influence for risk managers, or sometimes a lack of risk expertise at the board level. Also cited was a lack of metrics, program informality and a lack of risk tools (only 10% of companies with ERM programs have automated tools.)