Turning risk into results
Mature risk management drives financial results
In our experience with our clients, we see that companies with more mature risk management practices outperform their peers financially.
While most organizations perform the basic elements of risk management, top performers do more.
Our research suggests this translates to competitive advantage: we found that companies with more mature risk management practices generated the highest growth in revenue, EBITDA and EBITDA/EV.
Compound annual growth rates 2004–11* by risk maturity level
*2011 YTD reported as of 18 November 2011.
Where companies are looking to drive results
Organizations achieve results from risk in three interrelated ways:
In a worst-case scenario, an organization’s risks can proliferate at a far faster rate than its ability to provide coverage. Organizations need to have the ability to identify and address key risk areas and the agility to quickly close the gaps.
For many organizations, finding cost efficiencies in every facet of the organization continues to be critical to survival in this volatile economic environment.
Many organizations are looking for ways where risk and control management can help improve business performance.
What top performing companies do better
Our study found that while most organizations perform the basic elements of risk management, the top performers do more.
We found specific risk practices that were consistently present in the top performers (i.e., top 20% based on risk maturity) that were not present in the bottom 20%. These risk practices can be organized into the following challenge areas, as depicted in the chart below.
Our study findings suggest that these components are critical to transforming risk and driving better business performance.