Enterprise Risk Management

Why Enterprise Risk Management?

Enterprise Risk Management (ERM) is the strategic, enterprise-wide process of assessing, analysing and responding to the collective risks that impact an organisation's ability to achieve its goals. Companies able to successfully navigate their risk environments can build and manage a sustainable enterprise through the adoption of ERM strategies.

In recent years, corporate failures have led to a growing demand for transparency regarding risk management and corporate governance activities. Additionally, Standard & Poor's has announced that it will begin factoring a firm's ERM capabilities into its overall credit ratings, across all industry sectors. Other rating agencies are expected to put similar ERM guidelines into effect over the next few years.

Against this backdrop, organisations must re-evaluate their capabilities for managing risks across the enterprise.

The Benefits of ERM

ERM is an effective means of managing the uncertainty of business risk by targeting risks and transforming them into opportunities, ultimately increasing an organisation's competitive advantage. ERM also helps management teams consistently and accurately articulate the balance between risk and reward.

The benefits of ERM include:

  • Improving operational and financial performance and efficiency
  • Improving strategic decision making
  • Enhancing capital allocation
  • Ensuring regulatory and procedural compliance
  • Providing transparency for investors, rating agencies and stakeholders

Aon's ERM Approach – What Does it Mean for You?

Aon offers a wide range of risk-advisory services to help your organisation develop, implement and maintain its risk management infrastructure and framework. We analyse risk from an integrated perspective, exploring risk inter-relationships within your organisation.

Our proven six-stage process is practical, quantitative, and designed to ensure that your ERM strategies reach their full potential. To achieve this, it is critical to identify, prioritise and quantify your business's key risks and link them to operational and financial metrics. Risk response solutions can then be developed and implemented within an efficient risk governance framework.

Our ERM experts work with you to establish or refine your organization's strategy and objectives for managing risk. Activities include:

  • Evaluation of risk processes
  • Assessment of the existing risk culture
  • Development of an appropriate communication strategy and materials (including S&P)
  • Alignment of processes including identification of redundancy and gaps
  • Risk Readiness Review (including S&P)

We conduct risk identification and prioritisation activities using surveys, interviews and workshops, involving key personnel from your organisation. We review existing data such as risk steering committee notes, financial documents and other key reports. Key activities

include conducting an initial risk assessment, creating a risk map, identifying risk owners and producing a risk register.

Our risk experts enhance the ranking of key risks through quantification of potential impact, linked directly to financial performance. We develop risk models for virtually all types of operational and insurable risks and also evaluate risk interdependencies. We also work with you to define the risk appetite level of the organization, and assess risk retention strategies. Risk quantification provides a consistent method to measure risks and improve strategic decision-making.

As part of developing an ERM framework, we identify and evaluate risk response strategies. We identify risk mitigation options, and help determine the capital allocation strategy. Solutions can include business continuity planning, capital market solutions, pre-loss and post-loss risk control programs and supply-chain risk programs.

We help you implement risk response solutions through the development of a comprehensive plan. Key components of the plan include obtaining the support of risk management leadership and developing teams and tools for deployment. Areas addressed include:

  • Risk mitigation planning & implementation
  • Performance measurement & reporting

Our ERM experts will work with your executive management team to improve the risk organisation, processes, and tools for supporting the ERM framework. This includes analysis and development of people, processes, policies, and tools designed to ensure sustainability for the ERM program.

Practical Approach

Through our proven, practical approach, we provide you with:

  • An assessment of your needs to ensure you only invest in what's right for your business.
  • The ability to quantify all types of risk and clearly express risk exposure and risk appetite.
  • An end-to-end ERM solution that is tailored to meet your business objectives

Executable Solutions

  • We have a proven track record of delivering measurable results that link your ERM process to financial performance.
  • Our ERM specialists work in collaboration with you to ensure that your business goals are achieved.

How We Have Helped Our Clients

  • We helped a life-sciences company reduce earnings volatility by $1 billion through implementing a risk mitigation solution to minimise supply chain disruption.
  • Aon assisted a chemical company by analysing its business interruption exposure and restructuring its risk financing program, saving the business €500,000.
  • We helped an energy client by identifying unrealised projected profits of $400 million, freeing up investment capital.

ERM Knowledge and Experience

  • Our consultants are seasoned risk experts and qualified project managers, dedicated to keeping the project on time and within budget.
  • Aon has successfully completed global ERM projects across multiple industry sectors.
  • Our firm has received many awards for our dedication to thought leadership research and cutting edge risk management solutions.

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