The Risk Management Association (RMA) today announced the final results of its enterprise risk management (ERM) survey of 31 mostly regional and global financial institutions. Results indicate that institutions are moving toward a fully integrated enterprise risk management approach where a myriad of risk types are measured and many of the processes automated and standardized.
"Today regulatory expectations are the main driver behind the adoption of an ERM approach at participating institutions, and institutions are measuring the effectiveness of ERM from a favorable regulatory perspective,â said Mark Zmiewski, RMA director of strategic learning and research. âOver the near term, though, they expect ERM to improve both shareholder value and risk-adjusted profitability.â
Among the many benefits of ERM cited by the participants, the following benefits were most frequently indicated:
Improved understanding of risk and controls (48.4%)
Ability to set a common risk culture, i.e. appetite, language, etc.
Opportunity to identify and assess risk in total (45.2%)
Ability to apply consistent policy and standards (45.2%)
About half the participants said they expected that ERM would allow them to improve strategic decision-making in the next 18 to 24 months.
RMA has increased its emphasis on ERM by creating an Enterprise Risk Management Council to oversee its efforts. As council chair, Malcolm D.
Griggs, chief risk officer, Fifth Third Bank, Cincinnati, Ohio, serves on RMAâs board of directors.
âIn a global industryâin which firms are growing in size and complexityâit is critical to have an enterprise risk management culture that cuts across operating lines, encompassing credit risk, operational risk, and market risk,â said Zmiewski.