For a growing number of forward-thinking companies, enterprise risk management (ERM) is not only about protecting their companies from harm, but also about proactively creating measurable value that can strengthen their positions in the market. Studies have found that companies implementing robust ERM programs enjoy advantages in the overall value of their companies, in share price, and in stock price volatility.

Recently the Milliman Risk Institute conducted a survey of 125 North American risk executives on the current state of their ERM efforts. More than one-third of the companies responding (37%) represented manufacturing and commodities companies, and more than one in four (27%) represented financial services. Companies with annual revenues between $1 billion and $5 billion amounted to 60% of the sample, followed by a 25% share of companies with revenues of $5 billion or more.



The results of the survey showed that large majorities see the benefits of ERM fundamentals: improved risk-adjusted decision-making (72%), enhanced board risk oversight (60%), and improved performance management (59%). For half or more of respondents, ERM also creates value across a broader range of areas, including improved capital efficiency (58%), organizational and process optimization (55%), higher-quality strategic planning (54%), improved regulatory compliance (53%), and improved brand reputation (50%). (While ERM and the compliance function are often closely linked, our survey focused entirely on ERM except as it works directly with compensation.)

In this blog series, we will explore the progress of ERM programs in the companies surveyed, dividing them into "Beginners," "Transitionals," and "Trendsetters," and examining closely the actions companies have taken to move themselves along that spectrum from Beginner to Trendsetter.

To download a copy of the full report, click here.

For more information, please contact Mark Stephens.