Ernst & Young, the global consulting firm, just released an amazing report on Enterprise Risk Management. They found that “Companies in the top 20% of risk maturity globally generate three times level of EBITDA as those in the bottom 20%”.
Three times as much EBITDA!!!!… that’s amazing, and is in line with what I have been saying for some time…
Enterprise Risk Management is key to driving performance, and is not simply a compliance based process as so many organizations and technology providers suggest.
A core concept within the E&Y information is the idea of Risk Maturity, and it’s impact on performance. At Active Risk we have been engaged in a very large study of risk management experts around the world and our own research suggest that the majority of risk managers put their risk maturity level at 2 or 3 out of 5, suggesting a lot of room for improvement. E&Y suggests a number of ways to improve your organizations risk maturity model, many of which I have written on in previous posts, and puts a spotlight on the need for a combination of sound practice, culture and technology to achieve the highest levels of success.
Bottom line, Enterprise Risk Management is becoming more and more valuable to companies, and clearly drives real-world performance. Companies must embrace risk to build value.
We could all use 3X more EBITDA couldn’t we… Read the E&Y report