Upfront: ERM Gaining Ground — Slowly

Most executives want to build enterprise risk management capabilities, but implementation has been slow.

In the past few years, companies have enthusiastically embraced enterprise risk management (ERM) as a method of analyzing and confronting their strategic and operating risks. But implementation of ERM processes has been slow, according to a report from The Conference Board, a business research organization in New York City, and consulting firm Mercer Oliver Wyman, based on a survey of 271 risk management executives. While fully 91 percent of respondents said their organization is building or wants to build ERM capabilities, only 11 percent have completed their implementation.

"Most companies are in the process of adopting enterprise risk management to contribute to the value of the organization, to meet rising corporate governance challenges and regulatory actions -- particularly in the U.S. -- and to meet the challenges arising from external and internal risks," says Ellen Hexter, senior research fellow and program director for The Conference Board's ERM conferences and co-author of the report. But most organizations are still in the process of building the foundation for their ERM infrastructure. For example, only 15 percent of respondents said that their company has compiled a business risk inventory, a basic element of an ERM program.

Still, companies are seeing benefits from ERM even in the early stages of implementation. Among businesses with limited risk assessment programs, 58 percent said that ERM has helped them improve decision-making. That proportion climbs to 86 percent among companies with full-fledged ERM programs.