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Aon Risk Maturity Index
With its Aon Risk Maturity Index, Chicago-based Aon Corp. proved a long-held hypothesis among risk and finance professionals: There is a direct correlation between how an organization handles risk and its financial performance.
Developed by Aon Risk Solutions and Aon Global Risk Consulting, along with the Wharton School of the University of Pennsylvania, the Aon Risk Maturity Index provides risk and finance leaders a tool to objectively self-assess an organization's risk framework across 10 primary risk characteristics broken down into 125 specific questions.
Completing the questionnaire takes about a half hour, according to Aon, and produces an immediate Risk Maturity Rating along with commentary on how the organization can improve its handling of risk.
After analysis by the Aon Center for Innovation and Analytics and consultants from AGRC's Enterprise Risk Management Practice, participants receive a complimentary confidential six- to eight-page rating report about two to three weeks after completing the questionnaire.
The Risk Maturity Index evaluation is free, and organizations don't have to be an Aon client to participate.
The effort to develop the Risk Maturity Index, which earned a 2012 Innovation Award from Business Insurance, stemmed from Aon seeing a need as clients sought to better understand their risk management frameworks and processes in the face of new scrutiny and questions from stockholders, regulators and rating agencies, said Michael Joiner, associate director of enterprise risk management at AGRC in Atlanta.
“We knew it was going to be a big task,” Mr. Joiner said, adding that Aon wanted the index to be global, providing a tool for business leaders across all regions and industries.
“We weren't so concerned about what specific risks they were taking, but how they build their organization to face risk,” he said.
The Aon Risk Maturity Index was introduced in the U.S. in April 2011 and since has been rolled out worldwide. Aon is in the process of seeking a patent for the index as work continues on refining the tool, said Mr. Joiner.
“This is a multiyear process,” he said. “As we learn more about our clients' capabilities through the responses...it's definitely an evolution.” Among other things, Aon is considering how the index can be customized for different industries and regions, Mr. Joiner said.
The Wharton School modeled index responses against financial performance database information and found a statistically significant relationship between organizations' risk maturity ratings and their financial performance. “We think it is a tremendous insight and we think it validates what we as risk and financial professionals had always thought,” Mr. Joiner said.
Not only does the Aon Risk Maturity Index show companies where they are in terms of their risk management efforts, it helps guide their future course, Mr. Joiner said. “It's also given them some pointers on where to go, the next step,” he said. “It provides an initial roadmap in terms of "Where do we need to go next in (enterprise risk management)?'”
Products and services ranging from an international insurance information database to a book on financial risk management have been recognized with 2012 Innovation Awards from Business Insurance.