Yes, it's true. Insurance companies care about enterprise risk management, the practice of assessing the totality of risks facing a company. At least they say they do, according to a recent study.
But they differ on how to implement the practice. That just goes to show how enterprise risk management is really about fusing art and science.
Take, for example, a look at who exactly is responsible for risk management efforts, according to the results of the 2006 Towers Perrin-Tillinghast survey titled "Risk Management. Risk Opportunity."
A total of 43 percent of the respondents said this was the task of the chief risk officer or the risk management director. Another 18 percent said it was the responsibility of the chief financial officer or finance director. Still another 16 percent said it was the duty of the risk management committee. And 8 percent of the respondents said the job fell to the chief actuary. One percent said it was the job of the head of internal audit, and 14 percent said implementing the practice was the responsibility of some other function in the company.
The larger the insurer, the more likely it is to rely on a chief risk officer or a risk management director to execute companywide risk management initiatives, according to the survey.
Whoever's in charge of risk initiatives gets the attention of the company's top brass, the survey also found. A total of 45 percent of the respondents said the person responsible for risk management most often reports to the chief executive officer. Another 24 percent said that person most often reports to the chief financial officer or the finance director.
The survey found that 39 percent of insurers report risk to senior management monthly, and another 35 percent report it once a quarter. Only 8 percent of the companies said they report risk once every six months, and just 6 percent said they report it annually. A total of 5 percent said they report it less frequently than once a year, and 7 percent said they don't formally report risk.
One big area of growth since the last survey in 2004: the "cross-functional" risk management committee.
April 15, 2007
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