Enterprise risk management (ERM) has become one of the most important and valuable management tools for insurance companies. Increased focus on ERM by regulators, auditing firms, and rating agencies has heightened pressure on carriers to adopt robust ERM programs. Developments at both the state and federal level through 2014 will drive ERM initiatives further. What does this mean for an insurer's claims function?
A Wider World of Risk
ERM is the process of planning, organizing, leading, and controlling all activities of a company in an integrated fashion, in order to minimize the effects of risk on the company's capital and earnings. While individual business functional areas such as claims, underwriting and compliance typically manage specific kinds of loss or risk to the company, such as losses stemming from claims or lawsuits, an ERM program has a much broader scope. Its view is of the “whole world” of risk throughout a company.
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