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FIRMS SEEK MORE STRATEGIC APPROACHES TO RISK EVEN AS GROWTH IN ENTERPRISE RISK MANAGEMENT PLATEAUS

New York, September 4, 2008 — Nearly two in three executives with risk management responsibilities feel their organizations would benefit by taking a more strategic approach to risk, while fewer than one in five views their current risk program as strategic.  At the same time, growth of the discipline of enterprise risk management (ERM) — a key component of many strategic risk management approaches — appears to be reaching a plateau.

A new report from Marsh Inc., the world's leading insurance broker and risk advisor, in collaboration with the Risk and Insurance Management Society (RIMS) and Financial Executives International (FEI), finds the appetite for implementing ERM programs leveling off as firms direct resources to other corporate priorities.  The report, Excellence in Risk Management V: Viewing Risk Management Strategically, expands on findings of an extensive survey of risk practitioners presented in April during a session at RIMS 2008 Annual Conference & Exhibition in San Diego.

Larger, public companies are more likely to take a strategic approach to risk management.  Executives at these firms generally considered their most significant exposures to be related to brand reputation, business continuity, and regulatory/compliance issues.  On the other hand, firms with more traditional approaches to risk management tended to view their top exposures as those associated with corresponding insurance solutions, including general liability, property, and workers' compensation.

"Strategic risk management goes beyond traditional risk management to include the C-suite's wider perspective, which sees risk as something to optimize, not just to mitigate or avoid," said Brian Elowe, a managing director of Marsh.  "This enterprise-wide view looks for ways organizations can approach risk to gain a competitive advantage."

"It's not enough for companies to say that they want to be more strategic in risk management," noted Deborah Luthi, officer and director on RIMS board of directors.  "It's critical to have a long-term vision that defines where your firm wants to be, where it is now, and how it can move from one point to the next."

Nearly one-third of the survey participants said they would focus on governance structure as part of their ERM investments, a critical area that receives attention from the C-suite and board.  Nearly half indicated they also will invest ERM resources in training and education.

Satisfaction with ERM initiatives often involved the realization that they can't be treated as projects with a set beginning and ending; rather, ERM must be treated as a process for looking at risk throughout an organization.  Among firms with ERM initiatives in place for more than two years, 44 percent of the survey participants were either extremely or very satisfied with their program, while fewer than one in four with programs in place less than two years expressed the same level of satisfaction.  Similarly, 83 percent of participants with fully implemented ERM programs expressed high levels of satisfaction with them compared to 27 percent for those with partially implemented programs.

The report's findings also covered ERM and credit rating agencies, responses to major disasters and significant risk events, challenges related to supply chain risk management, and perceptions about risk among risk practitioners as compared with the C-suite.

About Marsh

Marsh has 26,000 employees and provides advice and transactional capabilities to clients in over 100 countries. Marsh is a unit of Marsh & McLennan Companies (MMC), a global professional services firm with more than 55,000 employees and annual revenue exceeding $11 billion. MMC also is the parent company of Guy Carpenter, the risk and reinsurance specialist; Mercer, the provider of HR and related financial advice and services; Oliver Wyman, the management consultancy; and Kroll, the risk consulting firm.  MMC's stock (ticker symbol: MMC) is listed on the New York, Chicago and London stock exchanges.  MMC's Web Site is www.mmc.com.

About the Risk and Insurance Management Society

The Risk and Insurance Management Society, Inc. (RIMS) is a not-for-profit organization dedicated to advancing the practice of risk management. Founded in 1950, RIMS represents more than 4,000 industrial, service, nonprofit, charitable and governmental entities. The Society serves more than 10,700 risk management professionals around the world. For more information, visit www.RIMS.org.

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Al Modugno
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