LONDON--(BUSINESS WIRE)--Risk management is now seen as a key contributor to a company’s source of competitive advantage with companies putting risk managers under increasing pressure to show measurable returns on investment in this area, according to ACE European Group (ACE) (NYSE:ACE).
The majority (97%) of senior executives and risk professionals surveyed for the latest global risk briefing report, conducted by the Economist Intelligence Unit (EIU) and sponsored by ACE, said that good risk management is an important source of competitive advantage. There is a growing consensus that risk management is now expected to be more than just a tool to protect a company from losses.
Most respondents thought their risk management operations enhanced shareholder value and, almost half of the 218 executives interviewed agreed that the most important benefits of risk management were protecting and enhancing the business’s reputation.
The research also showed that companies worldwide are planning to increase their investment in most areas of risk management over the next three years including improving the quality and reporting of data, training and strengthening risk assessment processes.
Commenting on the results of the global risk briefing, Andrew Kendrick, ACE European Group Chairman and CEO said: “Risk management has come of age. But with this maturity comes responsibilities. More than 60% of respondents to the research said that over the last three years the commitment of their company’s board to risk management issues had increased. But, as a result, there is a greater expectation that the operation will make a measurable return on the investment it receives.”
Whilst companies say they are confident in dealing well with more traditional areas of risk such as financing, market volatility and bad debts, the research showed a lack of confidence in effectively assessing and managing emerging risks and those outside the control of the business. This included such areas as IT, climate change and human capital risks.
Commenting on tackling these areas, Andrew Kendrick said: “With dangers lurking in areas of non-traditional risk, there is great potential for insurers, risk managers and their brokers to work together to develop effective risk transfer solutions.
“The impact of cyber and environmental related liabilities on businesses are just two examples of where both groups can, and are, working mutually to build relevant policy covers.”
Notes to editors:
ACE European Group has established branch offices in 19 countries across Europe, Freedom of Services permission to provide insurance services to clients in 29 EEA countries and affiliates in Egypt, Bahrain, Pakistan and Russia.
Part of the ACE Group of Companies, ACE European Group comprises the operations of ACE Europe, ACE Global Markets and ACE Tempest Re Group. ACE Europe provides a range of tailored Property and Casualty, Accident and Health and Personal Lines solutions for a diverse range of clients. ACE Global Markets (AGM) is ACE’s specialty international business, underwriting through ACE’s Lloyd’s Syndicate 2488 and ACE European Group Limited. Specialty lines include excess and surplus lines business, Marine, Aviation, Energy and Political Risk as well as Property, Financial Lines and Accident and Health. Additional information on ACE European Group can be found at www.aceeuropeangroup.com.
The ACE Group of Companies is a global leader in insurance and reinsurance serving a diverse group of clients. Headed by ACE Limited (NYSE: ACE), a component of the Standard & Poor’s 500 stock index, the ACE Group conducts its business on a worldwide basis with operating subsidiaries in more than 50 countries. Additional information can be found at: www.acelimited.com
About the research
The global risk briefing has been tracking corporate attitudes to risk management for over two years.
In February 2007, The Economist Intelligence Unit surveyed 218 executives around the world about their approach to risk management and their perception of the key challenges and opportunities facing the function attitudes. The survey and paper was sponsored by ACE, IBM and KPMG.
Respondents represent a wide range of industries and regions, with roughly one-third each from Asia and Australasia, North America and Western Europe. Approximately 50% of respondents represent businesses with annual revenue of more than US$500m. All respondents have influence over, or responsibility for, strategic decisions on risk management at their companies.