Implementing ERM can be challenging because the disciplineitself “has not achieved a consistent, standard approach,” saysStefan Holzberger, vice president of rating criteria andregulatory-policy development at A.M. Best. 

“So depending upon which consultant you talk to, or which brokeryou talk to who can help companies with their ERM capabilities,there is a vast inconsistency from one approach to the next.”

Part of the inevitable reason for this is that companies arestructured differently, managed differently and have very differentrisk tolerances, he says.

“An ERM focus for one company might be more of a defensiveposition, to make sure they don't lose X-amount of dollars in agiven year or quarter,” Holzberger says, while another companymight use ERM to take more risk and be more aggressive in themarket.

Peter Dickey, assistant vice president in thereinsurance-ratings division with A.M. Best, points out that thecosts associated with an ERM implementation can be a big challengeas well. 

“You have to hire people, to invest in systems—and not everysmall regional company has that capacity,” he says.