Posted on 14 Jan 2009
Seventy percent of UK risk managers have declared that making sure the employees in their organization are risk-savvy is their biggest challenge in light of new pitfalls according to research conducted by Aon, the leading global provider of risk management services.
The risks companies are facing, such as increased company insolvencies, less access to credit and increased levels of fraud, need to be dealt with by employees throughout the organization rather than just at senior management levels.
According to the survey of UK businesses the key risk management challenges they face in 2009 are:
Embedding ERM in the culture of the organisation: 70%
Keeping ‘risk registers’ real and relevant: 47%
Making the link between ERM and strategic planning processes: 34%
Gaining senior executive sponsorship: 19%
Making business continuity plans relevant to line managers: 13%
Credit rating agency scrutiny of ERM: 6%
Alex Hindson, head of enterprise risk management at Aon Global Risk Consulting comments: “When the markets are literally crashing down around us and we don’t know what is just around the corner it is extremely tempting to focus just on the problems of today, rather than look at the issues and factors that are going to help us survive tomorrow, but this short term view can often be counter-productive. It is essential to look at just where your business might need some extra support, whether it be finding alternate suppliers in case yours goes into liquidation, or re-thinking your insurance program to suit your changing business model.
“UK organizations have recognized they need to take a close look at just where and how they face risk, yet there is a disconnect out there between knowing you need a plan, having a plan and actually implementing that plan.
“Large businesses, especially, are notorious for creating ‘silos’, or individual parts of the business that do not communicate effectively with each other or share common business objectives. This is perhaps one of the most risk-laden business situations there is. As part of any ERM program it is vital to break down these barriers so there is a transparent view of the whole business and risks can be assessed properly. Only then can you truly assess the risks facing a company and how you overcome them.
“It is fundamental to get the backing of senior management in creating an ERM program. If not, there is the risk the program will be dead in the water. By gaining this type of support, there will be a mandate for change. It is, though, also essential that employees throughout the business understand the who’s, what’s and why’s of the ERM program. This can be achieved by making the risks you are looking to catalogue and work around or with relevant to each person.”