The ERM buzz, the importance of measuring risk and the impact on ratings

Considering the vast number of consultants, software firms and universities touting their expertise in ERM and the multiple seminars focused on this topic, it would appear that ERM is the greatest development in the industry since marine risks were first pooled in the Lloyd’s coffee shop over three centuries ago. Fitch Ratings believes that, without question, ERM is a big step forward and Fitch firmly sees it advancing insurance risk management skills. The recent spate of corporate bankruptcies has led to greater regulatory oversight and a push for enhanced corporate governance. However, Fitch cautions that ERM should not be considered as a brand new concept in the insurance industry. ERM is only the latest stage in the evolution of the sector and has been aided by vast improvements in technology and data management. It is only the next logical step in solid, fundamental financial management of business operations.