Tag Archives: ERM Symposium

What is the biggest misconception about enterprise risk management?

We asked attendees of the 2012 Enterprise Risk Management Symposium in Washington, D.C., an open-ended question: What do you think is the biggest misconception about enterprise risk management? Here is what they had to say:

timestamp answer
3:17 PM It is too complex!
3:18 PM hard to demonstrate value
3:21 PM that an ERM implementation is achievable in finite time
5:14 PM that models need to be complicated
5:28 PM too wishy washy
5:32 PM looking over your shoulder
5:33 PM that it serves as an audit function even though it does more than that
5:39 PM the tool gives specific answers to business questions
5:43 PM it’s about people not exogenous events
5:40 PM that ERM can generate value
5:49 PM the number should say everything
5:52 PM that it is for compliance only
5:57 PM ability to quantify all risks
6:05 PM it’s the process not the result
6:09 PM it’s complicated
5:25 PM It can provide THE answer and will address all business issues.
5:40 PM it is a compliance exercise
5:47 PM compliance function
6:02 PM that it holds us back from a business perspective.
6:13 PM it is one and done
6:21 PM the value of ERM is questionable
6:26 PM that erm takes away the risk
6:31 PM static. not evolving
6:33 PM erm is just meant for risk manager not entire organization.
6:33 PM erm is for calculating capital only
6:38 PM is an independent process
6:43 PM it’s only about economic capital
5:47 PM too complex
6:02 PM there are no standards
6:20 PM lack of awareness
7:32 AM it is too complex and costly. Where can I find independent experts to get us started?
7:52 AM theory of risk and light
10:10 AM focus on capital modeling
10:13 AM only management is involved
10:16 AM internal model is erm
10:18 AM that ERM is a compliance exercise
10:20 AM that it is too focused on the downside
10:24 AM it is easy
10:27 AM prevents doing business
10:29 AM overly complex
10:29 AM negative interpretation of identifying or acknowledging the risks
10:37 AM save the enterprise from failure
10:09 AM just a compliance exercise
10:27 AM we seem to be on right track
10:30 AM difficult to implement
12:20 PM only about downside risk
12:21 PM it is too hard
12:19 PM It will not solve all of the problems immediately.
12:22 PM not considered strategic
12:24 PM too complex for implementation
12:23 PM it is too difficult to implement
12:26 PM one size fits all.
12:26 PM that it is just a bunch of objective formulas
12:28 PM not just about quants, about demonstrating that you can help the business achieve objectives. value add
12:30 PM commitment from senior management
12:34 PM it reduces value
2:22 PM it doesn’t add value.
2:33 PM corp perspective
4:01 PM that ERM is focused on the down side
4:08 PM it is strategic planning in disguise
4:12 PM there is only one right way
4:26 PM unnecessary
5:58 PM staff vs strategic function
6:11 PM risk appetite is easy to set and allocate down to business units
6:15 PM top misconception is that it is a compliance and control process.
6:16 PM only cost, no benefits
6:20 PM silo based misconceptions regarding certain risks (primarily investment, liquidity)
6:25 PM Quantitative models are overrated
6:56 PM that we can predict every risk accurately
7:38 PM That risk can be represented by a purely objective measure.
7:42 PM that it is a cure all
7:47 PM quant exercise only
7:35 AM that it’s a compliance exercise when it can reveal hidden risks and opportunities and increase risk awareness

What does this have to do with risk management?


 

We’re glad you asked. Alongside several questions about the maturity of enterprise risk management (ERM) models, we’ve  been asking attendees at the 2012 ERM Symposium in Washington DC how they would characterize the risk management breakdown that led to the Titanic sinking just over 100 years ago. Here’s what they had to say.

What is the greatest barrier to ERM success?

The results from our first 50 enterprise risk management iPad surveys are streaming live at the Milliman ERM Symposium booth. One of the more intriguing early findings: Two barriers have jumped out as major impediments to ERM success. Risk professionals are asking: How do we measure value? And how do we navigate the complexity of an ERM program?

Anyone interested in participating in the survey or in seeing the full results should visit the Milliman booth.

 

Chicago ERM Symposium results

We received a number of inquiries about the results of our survey at the ERM Symposium in Chicago last week, so we’ve decided to publish the results here.  While our survey was hardly scientific, we thought it was interesting to see how attendees view the evolving Enterprise Risk Management landscape, and hope you agree. Our thanks to the many people who took the time to speak with us at the Symposium.

What every CFO should know, according to our real-time survey of ERM attendees

We asked ERM Symposium attendees, “What should every CEO know?” Here are samplings of the answers we have received so far:

  • There is no free risk
  • The numbers are only a current estimate
  • A knowledge of risk is key in knowing the value of the company
  • Listen to your CRO!
  • Risk has a value
  • Decisions can be made
  • What’s the cost of not doing ERM?
  • How do risks correlate?
  • What return should I expect on my ERM investment and how should I go about calculating that return?