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Link Confirmed between Financial Performance and Risk Management Maturity: Aon and Wharton School

Posted on 03 Oct 2011

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Aon Risk Solutions, the global risk management business of Aon Corporation, announced early findings drawn from the Aon Risk Maturity Index: There is a positive relationship between the maturity of an organization's risk management framework and its financial performance.

Launched earlier this year in partnership with The Wharton School of the University of Pennsylvania, the Aon Risk Maturity Index is a proprietary online tool created to empower risk and finance leaders to assess the development level of their organization's risk management structure and implementation.

Index questions focus on corporate governance, management decision processes and risk management processes. Aon and Wharton analyze responses to identify those activities associated with improved financial performance. Upon completion of the assessment questions, participants immediately receive a risk maturity rating, comments for improving the rating as well as insight into the levels of risk maturity globally.

"By launching this index and performing extensive analysis, we have answered the question business leaders have been asking for years: Does better risk management really make a difference to our bottom line?" said Theresa Bourdon, group managing director, Aon Global Risk Consulting - Americas.

"The writing was on the wall, and now we have the facts to support the importance of a strategic risk management framework."

Using a preliminary set of index data for publicly traded companies – ranging from mid-sized firms to the largest Fortune 100 organizations, Chris Ittner with The Wharton School determined a statistically significant relationship between the organization's risk maturity rating and financial performance. Ittner's findings reflect that higher risk maturity ratings are associated with improved return on assets and stock performance for most firms and the components of maturity associated with these performance differences are likely to vary by industry.

In addition, analysis of information gathered by the index to date points to common threads among organizations that received an above-average risk maturity rating (i.e. 3.5 – 5 on the 1-5 rating scale).

"We are seeing firms that rate above average in risk maturity differentiate themselves in three areas: risk complexity awareness, formal agreement on risk management strategy/expectations and the degree to which organizational architecture is aligned to support achievement of risk management objectives," said Michael Joiner, associate director of Enterprise Risk Management for Aon Global Risk Consulting. "Organizations seeking to enhance their risk management framework can use these three characteristics to develop an initial roadmap."

Accessing the experience and knowledge of Aon Risk Solutions, Aon Global Risk Consulting and Aon Hewitt, questions for the Aon Risk Maturity Index were created to align with the following 10 characteristics of risk maturity:

1. Board Understanding and Commitment to Risk Management
2. Executive-level Risk Management Stewardship
3. Risk Communication
4. Risk Culture: Engagement and Accountability
5. Risk Identification
6. Stakeholder Participation in Risk Management
7. Risk Information and Decision-making Processes
8. Integrating Risk Management and Human Capital Processes
9. Risk Analysis and Quantification to Understand Risk and Demonstrate Value
10. Risk Management Focus on Value Creation

As the index database grows, Aon and Wharton look to identify the specific sets of activities that deliver the greatest return on investment and how they may differ by industry. The index is accessible by all interested organizations by emailing a request to In addition to the immediate feedback provided upon completion of the 30-35 minute index questions, participants will receive a complimentary detailed results report approximately 10 to 15 business days thereafter. All responses and risk maturity ratings are held confidential; any reports from Aon and Wharton will cite data in the aggregate only. Additional information can be found at