RiskTech Forum

SAS: Maximizing shareholder value with SAS® Enterprise Risk Management

Posted: 3 May 2007  |  Source: SAS

Uncertainty in business makes it difficult to accurately predict and avoid large fluctuations in the performance of capital across the firm(s). As global markets mature, institutions recognize that risks are intertwined and should be measured in an integrated manner. The ability to accurately measure, predict and act on these measures has proven elusive. To meet these challenges, firms are looking for a true enterprise risk management solution. The challenges facing companies include issues ranging from data management to implementing complex analytical techniques.  Companies who successfully measure and act upon risk-adjusted returns are typically rewarded with higher valuations from financial markets, higher credit ratings and lower costs of capital. Small changes in valuation or investment costs can translate into significant returns on investment.

What is enterprise risk management?

Enterprise risk management (ERM) is the pulling together of information fromacross historically separate areas and consolidation of results into one picture that represents a complete view of a company’s risk. Do you have a consolidated picture of your organization? See if you can answer the following questions:

• Can you accurately explain your company’s earnings volatility?
• Can you anticipate how operational risk will affect earnings?
• Can you identify and value risk by geography, business unit or market segment?
• Does your company appear under-valued compared with your competitors?
• Does management spend less time making strategic decisions and more time calculating results to meet regulatory requirements?

The ideal ERM platform would help financial executives and portfolio managers answer these questions in order to define and communicate quantitative goals to the employees who are charged with executing strategy. It would give everyone in the organization access to a clear view of the company in terms of risks and define individual behaviors that could affect the risk control process.

At the same time, it would provide the necessary diagnostic tools to dig deeper into the details of information, to help decision makers visualize complex relationships, comprehend them and react. And it would include the necessary forecasting models so analysts can perform “what-if” scenarios before trying them in the real world.
Finally, it would help you depict your organization more clearly in terms of risks, making it more competitive in the marketplace.

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