Cultural factors are the most common challenge to instituting a consistent, global risk management approach in the key emerging markets of Asia-Pacific (excluding Australia and New Zealand), Central America, Eastern Europe, Middle East/Africa and South America. That's according to new findings in Aon Risk Solutions' Aon Risk Maturity Index, a proprietary online tool created to help risk and finance leaders assess the development level of their organization's risk management structures and implementation. Aon Risk Solutions, the global risk management business of Aon plc, announced this research at the 2012 Risk and Insurance Management Society's (RIMS) annual conference and exhibition in Philadelphia.
"Just as an organization must consider cultural differences in its decisions around new market or product entry, it must also consider cultural differences when setting its risk management framework strategy," said Michael Joiner, associate director of enterprise risk management for Aon Global Risk Consulting, in a press release.
Aon Risk Maturity Index questions focus on corporate governance, management decision processes and risk management processes. Specific to this finding, participants were asked, "For each region in which your organization operates, please indicate the key challenges to instituting consistent risk management approaches" and were given the following multiple choice set of factors to consider: legal/regulatory, logistics/geographic, economic/financial, cultural and human capital/talent.
"As many businesses sharpen their focus on remaining competitive and sustainable in a world of uncertainty, this finding reminds us of the importance of starting with a solid understanding of both the environment in which an organization operates and the complexity of risks it faces," said Theresa Bourdon, group managing director, Aon Global Risk Consulting – Americas, in the press release. "The Aon Risk Maturity Index is generating data that can be used to drive insights on business practices globally. As we expected, we are beginning to see interesting trends in the overall risk maturity of organizations based in different parts of the world.
"For example, in more mature markets where risk management has historically been a key component of an organization's operations, cultural challenges are less of an issue. In these cases, organizations are able to focus on the challenges driven by legal/regulatory, economic, human capital and logistics issues."
Looking at the remaining regions, human capital/talent factors were the most frequently identified challenge for organizations with operations in North America. Logistics/geographic factors topped the list for organizations with operations in Australia/New Zealand and Western Europe. The Aon Risk Maturity Index analysis also suggests the key challenges identified are consistent across major industries.
Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio