GFC highlights importance of risk management: report

The Risk and Insurance Management Society (RIMS) has released a report titled The 2008 Financial Crisis: A Wake-up Call for Enterprise Risk Management, petitioning a call to action for ERM."This…

Lawyers Weekly • 30 January 2009 • Big Law

The Risk and Insurance Management Society (RIMS) has released a report titled The 2008 Financial Crisis: A Wake-up Call for Enterprise Risk Management, petitioning a call to action for ERM.

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"This is an imperative that says - in order to prevent another financial catastrophe - organisations must change the way they think about risk and consider implementing an ERM program, or improve the one already in place," said RIMS president and leader of risk management at NOVA Chemicals Corporation Joseph Restoule.

RIMS contends that there were a number of behavioural breakdowns that contributed to the financial crisis. These failures include over-use of financial models, over-reliance on compliance and controls, failure to understand risk tolerance, and failure to embed risk management within organisations. Further, it claims there was no governance failsafe built into risk management frameworks.

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