The fourth edition of the Aon Risk Maturity Index Insight Report provides evidence for a direct relationship between strong risk management practices and superior operating performance for organizations. The report was written by Aon Global Risk Consulting, in collaboration with the Wharton School of the University of Pennsylvania.
The Risk Maturity Index Insight Report analyzes the inverse relationship between a higher Risk Maturity Rating and lower stock price volatility as well as a direct relationship between a higher Risk Maturity Rating and superior operational financial performance. Additionally, the report’s findings reinforced the relationship between a higher Risk Maturity Rating and the relative resilience of an organization’s stock price in volatile equity, currency, and commodity market scenarios.
“This year, we focused on identifying specific best practices around how organizations can develop a cross-functional understanding of risk to improve their risk maturity and ultimately help boost their financial results,” said Kieran Stack, managing director at Aon Global Risk Consulting. “Our data confirms that organizations that successfully focus on improving this set of distinct risk-related factors as well as utilize advanced quantitative risk management techniques are more aware of their risk exposure and have enhanced agreement and alignment on required actions to help successfully realize superior performance.”
The specific strategies organizations should implement to effectively understand and manage risk are outlined in several new key findings, including:
- Communication of risk management strategies, objectives and practices;
- Collaboration in executing risk based practices across risk-based functions;
- Consensus on strategy for cross-functional risks.
The report also finds that organizations that successfully utilize risk quantification techniques experience greater transparency into the organization’s specific risk exposure and risk appetite – ultimately boosting the company’s operational performance.
Click here to access the 2015 Aon Risk Maturity Index Insight Report.