In today's business environment, the effective management of cross-enterprise risk is a key factor in planning for any organization's long-term viability. While there has always been a conceptual link between risk management and financial viability, today's economic volatility is impelling the move from concept to practice. As a result, enterprise risk management (ERM) has shifted from a "good business" discussion to a "mission critical" means of addressing volatility.

For some businesses, even today, such volatility continues to be the domain of the risk manager, who buys insurance and informally partners with management to address uninsurable risks. Indeed, it has taken the ongoing economic crisis to highlight the need for a more formal, strategic, and proactive means of managing risk.

For many firms, ERM now has moved from a discretionary to a non-discretionary commitment. For others, ERM is a response to board-level demands. Whatever the driver, one thing is clear: every business must more comprehensively balance the different methods used to address risk and volatility. If such a balance is not achieved, the result may be negative media coverage, financial instability, and the general perception that management is not in control — which would not be well received by any engaged board member, key stakeholder, rating agency, or customer. In sum, the audience is growing. The demands are greater. The stakes are higher. The question is no longer why ERM, but rather why not?

Marsh Risk Consulting's Enterprise Risk Services & Solutions (ERSS) group provides clients with a range of services to help them balance the most critical components of volatility and risk. The group deploys services that address ERM in whole and in part, based upon client need. We deliver a comprehensive ERM solution as well as offer stand-alone services that allow our clients to take a methodical, or compartmentalized, approach to ERM. In practice, we identify, define, and quantify the universe of risks that our clients face, and we provide the policies, processes, and infrastructure required to proactively treat those risks.

The ERSS team approaches engagements from a practical perspective, focusing on delivering operational-ready solutions designed to balance the alternative methods used to address risk. These solutions are delivered via three different practices: Risk Identification and Assessment, Risk Management Optimization, and Enterprise Risk Management.

Risk Identification and Assessment (RIA)
The RIA practice provides diagnostic services that are designed to efficiently and cost-effectively help our clients to quickly understand and prioritize critical, enterprise-wide risks. RIA services are typically deployed in advance of comprehensive ERM solutions and provide our clients with a more meaningful understanding of the scope of risk topics that need to be addressed. Generally speaking, RIA services are aligned with our clients' risk control environment and serve to consolidate both the insurable and uninsurable business risk management concepts.

The cornerstone service of RIA is Risk Focus, a five-step process that includes interviews and a facilitated workshop with top decision makers. Deliverables include a list of the organization's top 20 risks; a review of existing management controls and potential insurance options; business risk benchmark data on the relative position of the organization against others in its sector; and a risk action plan.

RIA services provide our clients with a conceptual bridge between a range of differing risk management philosophies, definitions, and functions. In fact, the RIA offerings are designed to consolidate client risk management needs and ensure alignment with broader risk management solutions. As a result, RIA provides clients with a logical starting point in the lifecycle of risk management services offered by Marsh.

Risk Management Optimization (RMO)
The RMO practice helps our clients critically evaluate and optimize the effectiveness of the dedicated risk management function. RMO offerings are designed to address both traditional risks and the traditional means and methods of existing risk management tasks, processes, and applications. As a result, the RMO offerings directly align with our clients’ need to implement leading practices that drive improved efficiency and effectiveness through the risk management function.

The RMO Function Review service is designed and executed with the primary objective of helping our clients improve performance and the results provided by the risk management function.  We address the specific means and methods our clients can implement to control costs. Function Review deliverables include a report that clearly details recommendations associated with the streamlining or elimination of specific activities/tasks; a gap analysis between the current practices and Marsh’s leading practices; and the identification of additional process improvement opportunities.

In-line with our clients’ need for efficiency-oriented solutions, RMO offers a range of different risk management Outsourcing services. As the economy continues to contract and cost control efforts accelerate, the RMO team can address both the immediate need for senior risk management professionals and the needs associated with the wholesale outsourcing of the risk management function. The deliverables associated with Outsourcing engagements vary widely based on client need, but are largely defined based on the scope of functional support that is provided.

RMO services provide our clients with solutions that immediately translate to operational effectiveness and, by extension, cost savings. Wherever possible, the RMO offerings are designed to dramatically change the way our clients view the existing risk management activities, tasks, and processes. As a result, RMO typically provides the ongoing maintenance services that support the risk management lifecycle.

Enterprise Risk Management (ERM)
The ERM practice represents the strategic aggregation point for the wide range of risk management services provided to our clients. Where many of the ERSS services are intended to support single client needs, ERM acts as the logical center point in the delivery of broader, more strategic, risk management solutions. In practice, the ERM offerings encompass the needs of multiple parties, functions, efforts, and budgets.

The ERM practice helps clients identify and assess material risks, develop specific mitigation strategies, enhance the effectiveness of their ERM programs and design enterprise-wide technology platforms that help clients meet their resource and financial objectives as well as ongoing monitoring and reporting obligations under applicable governance and regulatory requirements. Services include:

• Assessment of current state ERM initiatives — including review and analysis of an organization's risk tolerance, current exposures, and management practices, resulting in the prioritization of key risks and an understanding of the risk infrastructure;
• Design for a "future state" of ERM — including how to respond to material risks, a review of key opportunities for program improvement, and the development of mitigation strategies to improve the risk and reward trade-off along the risk response path of retention, avoidance, mitigation, and/or transfer; and
• Implementation of the ERM infrastructure — including building communication protocols, enhancing governance frameworks, developing material risk scorecards and tracking systems, and establishing business requirements and recommendations relative to possible technology solutions.

ERM services provide our clients with solutions designed to consolidate and enhance the existing range of risk management efforts, while transitioning our client's ability to manage risk from tactical and reactive to strategic and proactive.

The breadth and depth of services provided by each of the ERSS practices allow our clients to drive better resource allocation decisions, assist in increasing operational efficiency and effectiveness, support governance requirements, improve company controls, control environments and compliance adherence, and create a holistic, enterprise-wide risk aware culture.

In simple terms, ERSS is designed to help our clients to strike a meaningful balance between all the different volatility and risk management endeavors.

Contacts

Mat Allen
Enterprise Risk Services & Solutions (ERSS) Practice Leader
212-948-2522

Pam Rogers
Risk Management Optimization (RMO) Practice Leader
612-692-7874

Lisa Kremer
Enterprise Risk Management (ERM) Practice Leader
415-743-8349

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