EMB Identifies Top Shortfalls in Risk Management Programs

Sound ERM Framework Adds Tremendous Value but Many Programs Fall Short in
Several Areas
SAN DIEGO--(Business Wire)--
EMB, a global property and casualty (P&C) consulting firm, today identified the
top three shortfalls in insurer risk management programs: inconsistent or poorly
executed models, inadequate enterprise-wide collaboration, and contagion impact
among human capital risks and underwriting risk. The current economic downturn
is motivating insurers to improve risk management programs but many
organizations are still overlooking one or more of these critical areas in their
enterprise risk management (ERM) programs.

While many insurers are adept at identifying and prioritizing risks, they often
lack the understanding of how these risks can interact and affect an
organization`s entire risk profile. To take an ERM framework one step further,
leaders from the C-suite to individual departments must make aggregate risk
assessments and reduce the uncertainty or unknowns associated with a risk at any
given time.

Models are key scenario-testing tools in measuring risk. However, their
effectiveness requires consistency in data and use that can be difficult to
achieve between departments with differing goals. Closely related is the need
for company-wide collaboration in risk management decisions. Companies must
achieve the best combination of risk taking, risk mitigation and risk avoidance
to optimally achieve organization objectives and goals. To assure this mix will
be achieved, a key organizational leader - ideally a Chief Risk Officer - should
be appointed who can make risk decisions in the best interests of the entire
enterprise, as opposed to an individual department or business unit. All areas
of a business must fully support these key risk decisions to ensure an ERM
program is effective.

Human capital risk, including employee skills shortages and turnover, also poses
a danger to an organization`s risk profile, especially in terms of the contagion
impact it can have on other risks the company faces. For example, to properly
manage an insurance company`s underwriting risk, often one of the biggest risks
faced by insurance companies, the proper number of qualified agents and
employees must be on hand to design and implement an effective risk underwriting
process. Properly trained and experienced employees translate into better
business practices and reduced costs while helping organizations maintain
appropriate risk levels. When good employees are lost, it has the potential to
significantly impact an organization`s risk exposure.

"While it is reasonable to prioritize some risks over others at any given time,
insurers simply cannot ignore everyday risks, like employee turnover, and how
they can increase the potential of major business risks," said Tom Hettinger,
Managing Director, EMB North America. "Poorly designed or executed models, the
lack of enterprise-wide collaboration, and inadequate human capital management
can affect bottom-line numbers in major ways if overlooked. Organizations must
understand the interactions between all the risks they face to understand the
magnitude and importance of individual risks. Creating company-wide risk
profiles is essential in order for senior leadership to steer their
organizations strategically to deliver optimal value to their stakeholders."

About EMB in North America

Established in 1993, EMB (www.emb.com) is a rapidly growing international
consulting firm specializing in property and casualty (P&C) insurance. Its
services cover personal lines, commercial insurance and reinsurance, which
includes the London Market and Bermuda. EMB offers C-Counsel Business
Consulting, Actuarial Consulting, Professional Development, Marketing Sciences
and Software. Additionally, EMB pioneered the development and use of
high-performance actuarial software, which allow businesses to perform tasks
that would otherwise be impossible, impractical or hugely time-consuming. EMB
employs more than 300 people around the globe covering Americas, Asia-Pacific
and Europe, Middle East & Africa and clients include 28 of the top 30 P&C
companies in the world.

EMB America
Louisa Harbage, +1 858-793-1425
press-us@emb.com
or
LEWIS PR
Dan Gaffney, +1-617-226-8840
embus@lewispr.com

Copyright Business Wire 2009