Risk Management's Relationship to Performance

For those of you that missed it, last year EY released the results of a significant global, quantitative survey assessing the maturity level of risk management practices relative to performance.  In this report, Turning risk into results: How leading companies use risk management to fuel better performance, EY found that:

• The top-performing companies (from a risk maturity perspective) implemented on average twice as many of the key risk capabilities as those in the lowest-performing group.
• Companies in the top 20% of risk maturity generated three times the level of EBITDA as those in the bottom 20%; and
• Financial performance is highly correlated with the level of integration and coordination across risk, control and compliance functions.

These are significant findings, further highlighting the most important drivers for an organization to adopt ERM and mature their risk management program – increased performance and shareholder value!  If you are responsible for implementing your organization’s risk management program, do share this information with your leadership team.  It will help you coalesce support for the initiative, speed the program along, and silence naysayers who may be skeptical of the benefits

The full report can be obtained at the following link: http://www.ey.com/Publication/vwLUAssets/Turning_risk_into_results/$FILE/Turning%20risk%20into%20results_AU1082_1%20Feb%202012.pdf