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Companies with a higher Risk Maturity Rating and greater board oversight realize superior operational financial performance

Aon Global Risk Consulting, in collaboration with the Wharton School of the University of Pennsylvania, has released its Aon Risk Maturity Index Insight Report, October 2014.

This year’s report indicates six main findings:

1. Confirmation of past analysis on the inverse relationship between a higher Risk Maturity Rating and lower stock price volatility, and a direct relationship between a higher Risk Maturity Rating and superior operational financial performance.

2. Confirmation of past analysis on the relationship between a higher Risk Maturity Rating and the relative resilience of an organization’s stock price in the immediate aftermath of significant risk events.

3. Identification that the 2013/2014 bull equity market environment may have an equalizing effect on an organization’s stock price and create a false sense of security around to need to invest in a robust, holistic risk management approach.

4. Introduction of new findings that evidence a correlation between board risk oversight practices and risk maturity.

5. Groundbreaking new research showing a direct relationship between risk-based forecasting and planning and firm volatility and earnings predictability.

6. Introduction of cross-over analysis to Aon’s Global Risk Management Survey that indicates while organizations appear to identify similar opportunities and risks an organization’s level of planning, preparedness and response to these risks is distinctly different.

The report was developed as a means of driving marketplace insight on the relationship between an organization’s risk maturity and factors that drive organizational performance. This edition of the report confirmed findings from previous analyses, which found that more mature risk management practices directly correlate to stronger financial results and organizational and stock price resiliency in response to significant risk events.

http://www.aon.com/riskmaturityindex/

•Date: 23rd October 2014 • World •Type: Article • Topic: ERM


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