Aon study finds majority of companies lack ERM

A survey by Aon Global Risk Consulting has found that only 1 in 10 companies in the Americas and Europe has fully integrated an enterprise risk management (ERM) strategy, despite pressure from government regulators and corporate stakeholders to do so.
At the heart of ERM is a comprehensive understanding of the global risks facing an organization, the design of strategies to mitigate those risks and the building of a corporate culture focused on risk management, as Aon explained it.
For the survey, Aon Global Risk Consulting, a unit of Aon Corp., worked with David Burton Associates to poll Aon clients and key contacts over the Internet last July. Members of 1,500 leading global organizations were invited to participate.
Most knew the subject matter: 83 percent of respondents said they were reasonably familiar or very familiar with ERM and its implementation and purpose, but they also said significant challenges still exist when their organizations set out to execute an ERM strategy.
The survey also found that while many companies are taking an enterprise-wide look at their risks, only one in four organizations say that developing ERM programs is part of their strategic planning process.
Aon Global Risk Consulting identified corporate culture, strategy and resources as the three key elements of successful ERM programs, based on feedback from chief risk officers, risk managers and other senior executives surveyed from among the world’s largest firms.
“Companies need clear and consistent ERM frameworks in place to appropriately assess and respond to the collective risks that may impact their organizations today,” said Stephen Cross, CEO of Aon Global Risk Consulting, in a news release. “ERM provides the insight investors, management, ratings agencies and other stakeholders need to fully assess a company’s risk profile.”
Aon also encourages companies to marry their corporate culture with ERM, which it says increases the likelihood programs will be effective. Those organizations with the most mature ERM programs said corporate culture was entirely or significantly taken into account in its development, the survey found.
Performance-driven companies are more advanced in developing the strategy necessary to support ERM programs, and those that have a dedicated ERM function are also seeing greater results, Aon found. Currently, 50 percent of organizations have a formalized ERM team; an additional 20 percent said they are planning to establish one in the future.
One in four respondents, however, said that while their organization is aware of the risk, they have not yet implemented a structured response.
“For businesses to appropriately deal with the risks they face, it is imperative that they communicate the ERM message through all levels of their organizations,” said Andrew Tunnicliffe, AGRC’s head of global business development, in the news release.
“Our survey suggests companies are behind,” he added. “Just one in seven say their ERM function is good at communicating that message.” •
Full survey results, the report and case studies illustrating how ERM is being handled at various companies can be found at www.aon.com.