An effective risk management program can no longer be seen as a ‘nice-to-have’ for an organization. There are simply too many threats today. Yet it has only been in the past couple of years that companies have started ramping up their commitment to risk management. For instance, a 2005 study by Aon Ltd. in the U.K. noted that the percentage of companies with risk management/insurance departments has increased since the company’s 2003 survey (84% against 54%). Departments are less thinly staffed than previously with 53% of companies having five or fewer in the team, and 47% having six or more. Some 22% of companies now have more than 10 employees in their risk management/insurance department, up from 11% in 2003. These are positive signs.
But on the whole, most organizations in North America still find themselves scrambling to determine the resources and know-how to deal effectively with risk. In a recent PricewaterhouseCoopers survey, 60% of U.S. CEOs still see governance, risk management and compliance expenditure primarily as a cost rather than an investment. And only 25% of CEOs worldwide state that they are managing these priorities effectively. A new attitude to risk management is essential to make it an integral part of how an organization functions.
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