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Sweating Out the ERMs

What's your ERM score? Standard & Poor's plans to answer that question. But, first, it's requesting suggestions about the evaluation process from those who are about to be judged

By Beth Karlin | Updated on December 28, 2007

The day of reckoning is near. Somewhere around March 2, Standard & Poor’s expects to start evaluating nonfinancial companies’ enterprise risk management (ERM) programs, and then factoring their assessments into credit ratings. The goal is to anticipate a crisis before it makes headlines, says Steven J. Dreyer, S&P primary credit analyst. Some companies already have expressed concern about how S&P analysts can judge and score such amorphous information.

Dreyer answers: By analyzing the risk management culture and governance and risk controls, emerging risk preparation and strategic risk management through on-site observation, a series of questions, discussions with officials, tests and benchmarking against peers. The procedure will add a day to each rating, says Dreyer.

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