While insurers are adopting enterprise risk management to comply with ratings agencies' standards, many companies don't see ERM as being embedded or even relevant, according to an industry study.
The research by PricewaterhouseCoopers found that many insurers and other financial services organizations are questioning the effectiveness of ERM and its ability to deliver a return on investment, or meet the expectations of stakeholders.
ERM is generally described as an approach to identifying, defining, quantifying and treating all risks throughout an entire organization, whether insurable or not. ERM, unlike traditional risk management, deals with all types of risk, such as operational risk, credit risk, financial risk, hazard and event risk.
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