Pat Wechsler, Treasury & Risk: What do you see as the most important risk that companies face? Plumeri: Although some companies have been inspired to build a culture of shared corporate governance, perhaps the greatest macro risk is that of easing into a state of complacency. If our new millennium has demonstrated one thing, it is that events once deemed too extreme to merit serious consideration must be thoroughly explored through a formal, continuous and rigorous process of evaluation of internal and external risk factors. As for specific perils, the obvious and compelling top nominees continue to be terrorism and natural catastrophe risks. The overarching imperative for companies and governments is managing the associated aggregation risk–ever-growing concentrations of people and physical assets subject to windstorm, flood, earthquake or an act of terrorism.
T&R: What do you see as the most problematic area when attempting enterprise risk management?Plumeri: Besides getting a company to embrace the rationale for managing risk across the organization and commit resources, the most problematic areas are often the ones encountered at the very outset: achieving understanding of the drivers and priorities for the respective stakeholders; agreeing on the metrics to be used for risk assessment and modeling; and achieving consensus on methodology and project management. The language of risk and finance has many dialects. Properly designed and executed, the ERM process is the single best vehicle for achieving a common language platform and optimal deployment of a firm’s capital resources.
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