Corporate reputation and shareholder value are the key factors companies are taking into account when determining their risk assessment policies, according to a survey of 200 risk managers conducted this week by Lloyd''s of London and Insurance Day, a London-based insurance trade publication, at the RIMS 2001 convention.
Surprisingly, perhaps, preventing environmental damage ranked as businesses'' least significant criterion for risk assessment.
Twenty-six percent of the respondents gave environmental risks a score of four on an importance scale of one to seven with one being the most important.
In contrast, 52 percent of the respondents gave "protecting corporate reputation" a ranking of one and 45 percent awarded "maintaining shareholder value" the same mark.
Asked to define the importance of specific risks to their organizations with respect to impact, likelihood, manageability, risks involving loss of reputation and technological problems topped the list.
Environmental risks received the largest "least significant" rating.
Wendy Barker, president of Lloyd''s America Inc. said, "The rise of reputation as a major risk issue seems to be linked to the rise of the new economy. For the current generation of dot-coms and e-businesses, the only major asset they have is their reputation. One major reputational crisis can torpedo a dot-com very quickly."
"It''s interesting to note that environmental issues rated so low in the survey," Baker continued. "One can only hope risk managers are not simply putting their heads in the sand, but have managed these risks."
by Virginia Sutcliffe