Moore Stephens Survey Reveals Inconsistencies in Risk Management Application

Monday, April 02, 2007
95% of insurers who responded to a recent risk management survey conducted by leading insurance accountant and consultant Moore Stephens said they identified regulatory risk as the single biggest challenge facing them over the next two years - ahead of operational and financial risk. And 93% of responses from brokers placed regulatory risk at the top of the two-year agenda, ahead of strategic and financial risk. The Moore Stephens risk management survey showed that most firms were aware of the risk management requirements demanded by the regulators relative to their own businesses. Only 6% of respondents considered that they were not as informed as they should be about the requirements. Based on the responses received, the boards of insurers devote more time to risk management than do the boards of broking companies. The survey revealed that a high percentage of firms – with insurers once again ahead of brokers – had set up an appropriate risk management framework, including board-level leadership. Similarly, the majority of firms were generally quite adept at evidencing the manner in which they had incorporated risk management into their businesses, with formal policies and monitoring systems. But two-thirds of respondents admitted that they did not separate risk appetite from risk management in their internal policies and procedures. Risk management was shown to be in its infancy in many of the businesses surveyed. Two-thirds of all businesses responding had been practising risk management for three years or less. The survey revealed a generally poor level of linkage between risk management and business strategy. Too many firms are practising risk management for regulatory - rather than business - reasons. On the basis of responses received, brokers appeared to be better than insurers at communicating risk management policy to their staff. Overall, commercial risk management issues seem to be generally limited to senior managers and audit and risk committees, with only a moderate level of perceived involvement by other staff. Generally speaking, risk management seems not to be integrated with reward and appraisal processes, and there is very little evidence of effective self-assessment within firms. Overall, there was a disappointing level of recognition on the part of respondents of the true benefits of risk management to improved business performance and strategic planning, rather than just satisfying the regulators. All this indicates the industry is adopting .a “tick box” approach.

On the basis of responses received, insurers seemed to be more advanced in their thinking that specialist software could support and help them in the risk management process. Indeed, only one of the brokers who responded to the survey acknowledged that software formed a part of its current risk management policies and procedures. Writing in the latest Moore Stephens Insured Interest newsletter, partner Simon Gallagher says, “Overall, the responses to the survey revealed a reasonably good awareness of the regulatory requirements attending risk management, but inconsistency in properly embedding appropriate systems into the business environment and using those systems to best advantage. These inconsistencies will need to be resolved in view of the FSA’s ongoing commitment to overseeing proper risk management implementation.”

Maritime Reporter June 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

 
 
Maritime Contracts Maritime Standards Naval Architecture Pod Propulsion Port Authority Salvage Ship Electronics Ship Repair Ship Simulators Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1180 sec (8 req/sec)