PricewaterhouseCoopers put out an interesting study entitled “‘Does ERM Matter? Enterprise Risk Management in the Insurance Industry 2008.’”  In commenting on the article, Continuity Central discusses some of the difficulty found in implementing Enterprise Risk Management within financial institutions:

“Against the background of an ever tougher risk environment and growing demands from investors, regulators and rating agencies, PricewaterhouseCoopers says that many insurers and other financial services organisations are asking questions about the effectiveness of enterprise risk management and its ability to deliver a return on investment or meet the expectations of stakeholders.”

The article is worth reading.  One of the key points made is:

“…the study found that enterprise risk management is, in many cases, neither relevant to nor clearly understood by business teams. It is not fully embedded into strategic decisions and its integration into day-to-day decision making and frontline risk taking within many insurance companies remains limited, potentially undermining its ability to deal with a more complex risk environment and more exacting stakeholder expectations”

This article mainly addresses ERM within financial institutions.  These companies have a very real need for ERM, especially with a broad range of exposures to interest rates, natural disasters, and general economic turmoil. (more…)