LOS ANGELES—Executives see risk management as a significant and desired role in an organization, but a study shows the role hasn't yet tapped into its full potential to grow enterprises and strengthen their bottom lines.

The 10th annual Excellence in Risk Management survey, a joint effort by Marsh and the Risk and Insurance Management Society (RIMS), surveyed more than 1,200 risk managers, C-suite members, and others involved in risk functions in 2013.

While about half of all respondents say that risk management is included in executive activities in order to identify risks within corporate strategic plans, only 20 percent of executives and 15 percent of risk managers say this opportunity is actually extended or taken.

“This general move towards risk professionals adding more value to organization's strategic decisions is encouraging,” said Carol Fox, director of the strategic and enterprise risk practice at RIMS. “Yet, there is still much room for growth, and gaps remain between what senior leaders and risk professionals expect from the risk function in its delivery of strategic value.”

During a RIMS press conference at the group's annual conference in Los Angeles, Fox and Yvette Connor, Marsh's managing director of global RM and 3D national practice leader, discussed how aligning data and analysis of risk (key risk indicators, or KRIs) with business knowledge (key performance indicators, or KPIs), benefits both the risk manager's position and the C-suite.

Risk professionals and senior leaders ranked data and analysis as the number one and three focus areas, respectively, for developing risk management capabilities in 2013, and 74 percent answered that their organizations need to dig deeper into data, as 75 percent don't aggregate portfolio risks.

The speakers said the C-Suite and risk executives need to agree how the risk function can drive improvements in financing strategy, which will positively affect cash flow and profitability.

Most C-suite and risk professionals said the best use of data is to inform decisions about specific risks. However, risk managers placed insurance program optimization as their role's second-most important purpose, while the C-suite said they think risk professionals should define the company's risk bearing capacity and inform overall business strategy.

To close this disconnect, Connors said, risk managers must focus on growth, value, and profitability- and what they mean in financial terms- in order to be relevant to any of their company's growth strategies. She suggests taking the initiative to work on a project, for example, working with a firm's business unit as it is considering a new property transaction.

The CEO may need help with risk modeling on the project budget, or the risk manager's expertise may help him or her find volatility surrounding a revenue or expense- for example, a property viewed as a budget find could be located in a flood zone, potentially incurring business interruption costs that far outweigh money saved on the purchase.

“There is a significant opportunity for the risk management function to work in tandem with the other pieces of an organization to develop a living, breathing view of the risk portfolio,” she said. You don't have to own the risk, but you can be a valuable facilitator [of an opportunity]. When you get the right people in the same room, you can help move the organization forward.”

Fox gave an example of an energy company whose risk department discovered that its experts on high-energy wiring were retiring in three to four years, meaning the company only had a small window of time to continue offering the service.

Overall, risk managers can gain understanding of KPIs, such as new customer acquisition turnover and corporate profitability, by doing what they do best: by talking to the people in customer service, strategic planners, human resources and other siloed roles in the organization.

Special Reports /

RIMS: Strategic Risk Management Has Room to Grow

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