A new study by New York-based PricewaterhouseCoopers has confirmed that Enterprise Risk Management (ERM) is on the boardroom agenda as a key driver for a competitive edge in the insurance industry, but some leading insurers need to close the gap between the design and planning stages, and the actual execution and integration of ERM programs. Market and regulatory forces will continue to drive insurers to implement ERM as an enabler for attaining financial goals. Leading companies look to ERM as a framework under which they can not only manage all the categories of risk but also optimize their portfolios and enhance product development. Some, however, continue to struggle with the necessary infrastructure, people, processes and technology essential to fully reap these benefits.
Forward-thinking insurers have been developing ERM for some years, but it has only lately come to wider prominence in the wake of record losses, solvency scares and governance scandals. Insurance companies acknowledge ERM as one of the key enablers to managing uncertainty and almost a half of survey respondents viewed the protection of shareholder value as the main advantage of ERM, but just 5% felt that ERM was fully integrated with their strategic business decisions.
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