A report released by Ernst & Young LLP indicates that while a large majority of insurance companies now have enterprise risk management (ERM) policies, these policies are often not fully integrated elements of the corporation.
"Insurers have made significant strides laying the necessary ERM groundwork over the last few years, creating a strong sense of optimism with respect to future plans," said Doug French, Managing Principal and Insurance and Actuarial Advisory Services Leader, Ernst & Young LLP. "However, insurers need to be mindful of not underestimating the work required to reach the ultimate goal of adding value to the business decision-making process. In many ways, the industry is just beginning to recognize the challenges ahead."
The goal of ERM policies are to enhance shareholder value, manage potential tail risk exposure and provide knowledge for strategic decision-making. The basic promise of an ERM policy, as with any risk management strategy, is to help insurers better analyze the properties and clients they insure, which in turn helps insurers manage their claims payouts better.
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