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Many companies are working to incorporate ERM into their daily decision processes. One example from the insurance industry is the introduction of guarantees in the variable annuity market. When variable annuities and guaranteed benefits products were introduced in the 1990s, concentration risks surfaced. These problems demonstrated, in some cases, the inability of companies to manage those risks, but they also pointed out the ultimate reliance by companies on the integrity and availability of data to better understand the full picture. In recent years, these problems of the past have somewhat been resolved with many new risk management processes, "stress testing" and "what-if scenarios," but panelists agreed that Corporate America still has a gap in maximizing ERM's value in an organization --- an effort which should culminate in ERM's integration throughout an organization.

Ernst & Young's Karow advised the audience that the starting point for building out risk management in corporate decision making should be where it adds most value for a company. "Oftentimes we start where we are most mature in terms of our risk management activities, but that isn't always where the greatest value is created or diminished," he said. Karow explained strategic decision- making and new products or new systems can instead be better areas for risk managers to demonstrate value to an organization. "The inflection points --- where we change or do something new or different --- are where organizations fail and lose substantial amounts of money, or where organizations actually re-value in terms of entering new markets or launching new products with great success. These points, which create or diminish value, require greater ERM focus. The chance for success increases when we start to talk about risk and return."

Karow further urged establishing an organization's tolerance and appetite for both financial and non-financial risk and ensuring that it is integrated and consistent with its strategic planning and business strategies. "The bottom line is that chief risk officers need to understand the risk across all the various business areas, and they need to be at the table," said Washington Mutual's Wilson. She noted that risk managers in the banking industry need to be involved alongside other senior executives when it comes to discussing the appropriate risk management policies for their companies.

Adopting a complete risk management approach that takes into account the core risks of business risk, credit risk, operational risk, and market risk is essential for financial institutions operating today.

"There are some times when as a risk professional you look at the risk and you decide to transfer the risk to another area, such as, operational risk versus credit risk. There are other times when you accept the risk," Wilson said. "In this case it is critical that we make sure our senior managers know and understand the nature of the risk we are going to take."

Failure to adequately manage any of these core risks could result in a significant potential adverse impact, Wilson noted. "Any one of the core risks that are not addressed in a meaningful fashion could potentially have a reputational risk to the firm."

The ERM Symposium is sponsored by the Casualty Actuarial Society, the Professional Risk Managers' International Association, and the Society of Actuaries. This year's event was attended by about 550 risk management professionals including chief risk officers, chief financial officers, chief actuaries, risk managers, investment professionals, asset/liability management practitioners, and actuaries interested in risk management roles.

The Society of Actuaries is an educational, research and professional organization dedicated to serving the public and Society members. The Society's vision is for actuaries to be recognized as the leading professionals in the modeling and management of financial risk and contingent events.