“You can't control what you don't measure.” And you can't measure what you are not monitoring. From my earliest blogs, including Enterprise Risk Management: The Five-Course Meal, I have repeatedly chanted the need for risk reporting and monitoring as a key element of building and sustaining a healthy ERM program.
I am not alone. Particularly in the insurance industry, increasingly demanding regulators in the U.S., Europe and Asia, as well as rating agencies and savvy stockholders, are turning their attention to corporate adoption of ERM practices. They are, more than ever, expecting robust monitoring processes to manage risk, in all areas of an organization. Why is monitoring important?
The answer is easy: The best designed internal controls, such as thorough policy and procedure manuals, are useless if the company is not, in fact, adhering to those standards. Monitoring and reporting ensure compliance and help ward off potentially disastrous surprises.
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