Research finds direct relationship between strong risk management practices and organizational resiliency

Published: Wednesday, 08 November 2017 09:51

Aon in collaboration with the Wharton School of the University of Pennsylvania, has released the fifth edition of the Aon Risk Maturity Index Insight Report. Findings reinforced a direct relationship between strong risk management practices and superior operating performance for organizations. New this year, the report uncovered a relationship between improved Directors and Officers (D&O) premiums and risk maturity as well as examined the relationship between risk maturity and organizational resilience in the context of Brexit financial market shock scenarios.

Organizations with a higher overall Risk Maturity Index score paid significantly lower premiums for D&O insurance; specifically, a 10 percent increase of risk maturity correlated to a 3.8 percent improvement in D&O premiums. Organizations with lower premiums were all found to have greater transparency of risk communication, stronger risk identification of existing and emerging risks, a more formal process of gathering risk information, as well as sophisticated methods of risk analysis.

This year’s Risk Maturity Index Insight Report also reinforced past correlations of higher levels of risk maturity to higher levels of stock price performance as well as higher levels of risk maturity to lower levels of volatility. The Index also took a closer look at Brexit financial market shock scenarios, confirming a direct relationship between risk maturity and organizational resiliency as measured by the impact of Brexit on an organization’s stock price.

Developed by Aon and the Wharton School of the University of Pennsylvania, the Aon Risk Maturity Index was created in 2011 as a tool to assist senior finance, risk and legal professionals in identifying and addressing critical areas of concern in their risk management programs. The Index is an innovative platform that assists organizations in understanding the value of risk management in strengthening operating performance and/or reducing volatility by empowering them with insights and guidance on best practices tools and techniques to enhance their risk governance and risk management practices.

Obtain the report (registration required).