Survey reveals ERM strengths and weaknesses among Ferma members

A survey of Ferma members has revealed that internal risk reporting, the risk assessment process and risk management structure are the more mature areas of ERM, while readiness for EU regulations, risk quantification and the use of data and tools for risk monitoring are the weakest. The findings were presented by Marsh at Ferma’s Seminar in Antwerp this week and aim to help risk mangers benchmark themselves against their peers. The results are based on a poll of 135 risk managers, including 35 chief risk officers, from more than 20 countries in the lead-up to the event. Marsh speakers said that only a quarter of risk managers surveyed have fully carried out risk analysis for upcoming EU sustainability regulations. Meanwhile, less than a quarter (23%) said all risks are quantified and correlations between risks are considered in their organisation. While 10% said that risk quantification is not developed at all at their respective companies. When it comes to risk monitoring and support tools, just 13% set key risk indicators for real time monitoring. And although 43% use either dedicated risk management information systems or integrated GRC tools, a third still use Microsoft Office. The survey suggests that risk management’s integration with strategic planning is another ERM area that could be improved. While 39% of risk managers said they have comprehensive risk frameworks and escalation mechanisms in place in case risks are not aligned to appetite, almost a fifth (18%) have not even defined their risk appetite. Some 36% said ERM informs key risks across annual and strategic plan time horizons and 21% consider risk beyond the planning horizon. The more developed ERM areas include the risk management process, according to the survey. It finds that 75% of respondents make annual risk assessments and carry out specific key risk monitoring on a more frequent basis. Meanwhile, 41% analyse emerging risks based on changes to the external environment. On risk controls and action plans, 23% define actions addressing emerging risks to increase long-term resilience. The survey also focused on the maturity for risk governance and culture. It found that 33% of CROs report to the CEO and another 28% report to the c-suite, typically CFOs. A third of respondents have embedded risk culture in their organisations’ processes and day-to-day behaviours but 17% conceded there is a lot of variability between risk management principles across their organisation. On risk management integration with sustainability, most participants says ESG risks are an internal part of their ERM framework or they have sustainability designated stakeholders collaborating on ESG risk identification. A fifth (21%) say ESG risks are integrated into both strategy and sustainability processes. And only 19% deploy quantitative approaches and scenario analysis based on TCFD guidelines for short-, medium- and long-term impact analysis. The survey also asked risk managers how they plan to prioritise investments over the short and medium to long term. Investment to improve integration between risk management and ESG, boost risk mitigation and resilience, and step up risk governance came out as the key areas of investment focus.

Survey reveals ERM strengths and weaknesses among Ferma members

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