Risk Management Begins In Boardroom: Lloyd's Boss
NU Online News Service, April 21, 4:15 p.m. EST?The chairman of Lloyd's is warning companies that disaster planning needs board level attention and can't just rest on the company risk manager's shoulders alone.[@@]
Chairman Peter Levene gives that caution in remarks prepared for delivery tonight at a San Francisco meeting of the World Affairs Council discussion group.
Mr. Levene, a British lord, also cautions in his talk that "U.S. corporations are behind their global peers when it comes to practicing enterprise risk management--that is the holistic management of risk across the entire organization."
According to Mr. Levene, only 42 percent of U.S. chief executive officers have a formal process for identifying risk across the company, compared to 65 percent in Asia-Pacific and 80 percent in Europe.
Only 48 percent, he said, have a formal process for responding to risk across their enterprise.
An immediate culture change is needed at board level now to set "effective integrated strategies for dealing with tomorrow's risks," he said.
Businesses, he said should think about how various interruptions to their businesses, like terrorism or a SARS outbreak, can impact them and prepare accordingly.
Mr. Levene said concerns should pay attention to events that could affect their reputation and branding efforts as intangible assets have risen in importance.
"Business interruption often isn't covered by the traditional insurance policy. And few standard policies protect businesses from loss or damage to their intellectual property," he said.
Additionally, Mr. Levene commented that for the insurance industry to remain healthy "pricing must remain firm" so as to break the insurance market "free from turbulence and volatility."
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