Aon Global Risk Consulting, the risk consulting business of Aon, in collaboration with the Wharton School of the University of Pennsylvania, has released its fifth edition of the Aon Risk Maturity Index Insight Report (RMI). Report findings reinforce previous RMI research which reveals a direct relationship between strong risk management practices and superior operating performance for organisations. New this year, the report uncovered a relationship between improved Directors and Officers (D&O) premiums and risk maturity.
On average, organisations with a higher overall Risk Maturity Index score paid significantly lower premiums for D&O insurance; specifically, a 10 percent increase of risk maturity correlated to a 3.8 percent improvement in D&O premiums. However, there are a number of overriding considerations impacting price of D&O insurance in the current Australian environment which need to be taken into consideration.
Organisations with lower premiums were all found to have greater transparency of risk communication, stronger risk identification of existing and emerging risks, a more formal process of gathering risk information, as well as sophisticated methods of risk analysis.
This year’s Risk Maturity Index also reinforced past correlations of higher levels of risk maturity to higher levels of stock price performance as well as higher levels of risk maturity to lower levels of volatility. Well designed and sustainable risk management practices continue to be the best defense against an uncertain external environment. Strong risk management principles and practices, implemented with consensus across and among the organisation, can contribute to higher returns, even during significant market events.
About the Aon Risk Maturity Index
Developed by Aon and the Wharton School of the University of Pennsylvania, the award-winning Aon Risk Maturity Index was created in 2011 as a tool to assist senior finance, risk and legal professionals in identifying and addressing critical areas of concern in their risk management programs. The Index is an innovative platform that assists organisations in understanding the value of risk management in strengthening operating performance and/or reducing volatility by empowering them with insights and guidance on best practices tools and techniques to enhance their risk governance and risk management practices. Results for the 2017 Report were aggregated from more than 1,700 global participants, which include risk, financial, legal and c-suite executives.
If you would like to participate in the Risk Maturity Index survey, please register your interest here, and a member of the Aon team will be in touch with you.