The concept of Enterprise Risk Management, or the incorporation of risk assessment in all functional areas of an organization, is not especially new. In 2002, for example, Sarbanes-Oxley required internal controls on financial reports, usually including risk assessment. However, this tidbit from an article on “Smarter Risk Management” from Director of Finance Online caught our attention:
“Standard&Poor’s has recently indicated that they will begin incorporating consideration of the strength of enterprise risk management practices as a component of their credit ratings methodology. This is yet another incentive for ensuring that a company’s approach to risk management is robust, capable of being articulated and will stand up to scrutiny.”
If your S&P score depends, at least in part, on your risk management methods, there may be hope for us yet. There are others signs that enterprise risk management is making a comeback, or at least is remaining in the corporate consciousness. A September piece from Business World Online indicates:
“Risk management has recently come into prominence in the corporate suite. … Risk management exists because a company wants to take advantage of or minimize risks that affect it. These factors include political risks, foreign exchange risks, interest rate risks, liquidity risks, price risks, market risks, operational risks, credit risks, and employee risks.”
What many of these reports miss, however, is the value in learning about ERM directly from others facing risk – and not just in your own industry. The Palisade Risk&Decision Analysis Conference in New York City (Nov 13-14, 2008), is an example of a risk forum bringing together executives from a variety of industries for the purpose of exchanging ideas on risk. Over 20 case studies form a key learning model, along with software training.
DMUU Training Team