The economic uncertainty of recent years has become a key driver for enterprise risk management (ERM), according a research report.

It found that the volatility impacting industries around the world has challenged companies to more effectively identify risks, eliminate exposure and implement processes aligning risk management with compliance and governance.

The research report, which took in more than 210 companies worldwide, found that top-performing companies are 83 per cent more likely to be able to clearly assess the status of existing risk and 71 per cent more likely to have transparency and clear communication of risk information, thereby building a risk-aware culture.

“With today’s increased consumer and governmental scrutiny, companies must be aware of events that directly impact their brand image and their competitive position,” said David Hatch, senior vice president and general manager of research operations for Aberdeen Group, which conducted the research report.

By integrating risk information into strategic planning, capital allocation, core decision-making and performance management, he said top performers gained a 17 per cent improvement in effectiveness of risk detection and assessment year-on-year – 7 per cent higher than all other companies.

The report also found that only 12 per cent of companies have an ERM program in place, with 37 per cent working on it – while a lack of resources was a problem for half the companies surveyed.

To be a top-performing company (or “best-in-class” according to the research report) companies need to integrate risk management into the organisational structure and culture, and employ analytics for monitoring and measuring risk.

Best-in-class companies have also standardised risk management policies and procedures, established management accountability for risk, incorporated risk information into core decision-making activities and used technology is a key enabler for risk management.