TheBenefitsofEnterpriseRiskManagementEvidencefromthe.pdfVIP

Submitted for the 2013 Enterprise Risk Management Symposium April 22-24, 2013, Chicago Paper title The benefits of implementing Enterprise Risk Management: evidence from the non-life insurance industry Authors Lead (corresponding) author Dr. Madhu Acharyya Centre for Finance and Risk, The Business School Bournemouth University, 89 Holdenhurst Road Bournemouth, BH8 8EB, United Kingdom Email: macharyya@bournemouth.ac.uk Telephone: +44 (0) 1202 96 8738 Second author: Dr. Stanley Mutenga Executive Director, Starz Risk Solutions 23 Selous Avenue, Harare, Zimbabwe Email: samutenga@ Abstract This paper addresses two critical questions on the performance of Enterprise Risk Management (ERM) i.e., whether its implementation adds value to the firm and whether it takes stages to mature. It confirms both arguments that ERM creates value when the infrastructure is fully embedded into a company’s operations and matured. The traditional methods of measuring value creation in non-life insurance; the combined and operation ratios failed to capture the benefits of ERM in a consistent way. The more scientific measure, return on capital and surplus which take a portfolio view on performance better captured the benefits of ERM than the traditional method. The results confirm the need to treat the implementation of risk management in a holistic manner if true benefits are to be realised. Therefore, the quality of value creation depends on the level of integration of risk into operations, underwriting,