Risk management; Most firms agree: ERM is a challenge.

An overwhelming majority of companies have started to use enterprise risk management (ERM) as a strategic business tool to more effectively manage a variety of risks, but most firms say they still have a long way to go, according to a report from The Conference Board.

The report, based on The Conference Board/Mercer Oliver Wyman survey of 271 risk management executives, found that more than 90 percent of executives say they are building or want to build ERM management processes into their organizations, but only 11 percent report they have completed their implementation.

The Conference Board defines ERM as a framework, instituted by a firm's board of directors and management, that is applied strategically and across the enterprise. It is designed to identify potential events that may impact the firm, manage risks within defined parameters and provide reasonable assurance regarding the achievement of the firm's business objectives.

The study includes executives based in a wide variety of industries throughout North America and Europe and insight gleaned from top executives at conferences held recently by The Conference Board. The study was sponsored by Mercer Oliver Wyman, a leading financial services and risk management consulting firm, which also provided key data for the report.

Companies continue to face escalating pressures to implement ERM processes. Both industry and government regulatory bodies, as well as investors, are increasingly examining these policies and processes. Boards of directors in a rising number of industries are now required to review and report on the effectiveness of ERM frameworks in their companies.

The survey results indicate that more than two-thirds of both boards of directors and senior management staff consider risk management to be an important responsibility. At the financial/operational levels, especially among CFOs, there is an even higher awareness of the importance of ERM. Behind this trend: pressures to reduce the unexpected volatility of earnings and a need to implement internal mandates demanded by the Sarbanes-Oxley Act and other similar regulatory frameworks elsewhere in the world.